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EMANCIAL CRISES: 



THEIR 



CAUSES AND EFFECTS. 



BY 

HENKY C. CAREY. 




V 

PHILADELPHIA : 
HENEY CAEEY BATED, 

INDUSTRIAL PUBLISHER, 

No. 4 06 WALNUT STREET. 

1864. 



FINANCIAL CRISES: THEIK CAUSES AND EFFECTS. 



LETTER FIRST. 

Dear Sir. — In your recent and liigtly interesting volume, wliich. 
I have just now read, there is a passage to which, on account of its great 
importance as regards the progress of man towards an ultimate state of 
perfect freedom or absolute slavery, I feel disposed to invite your atten- 
tion. It is as follows : " I am pained to hear such bad news from the 
United States — such accounts of embarrassments and failures, of sud- 
den poverty falling on the opulent, and thousands left destitute of em- 
ployment, and perhaps of bread. This is one of the epidemic visitations 
against which, I fear, no human prudence can provide, so far, at least, 
as to prevent their recurrence at longer or shorter intervals, any more 
than it can prevent the scarlet fever or the cholera. A money market 
always in perfect health and soundness would imply infallible wisdom in 
those who conduct its operations. I hope to hear news of a better state 
of things before I write again." 

Is this really so ? ■ Can it be, that the frequent recurrence of such 
calamities is beyond the reach of man's prevention ? To admit that so 
it certainly was, would be, as it seems to me, to admit that Providence 
had so adjusted the laws under vfhich we exist, as to produce those "epi- 
demic visitations" of which you speak, and of which the direct eifect, 
as all must see, is that of placing those who need to sell their labor at 
the mercy of those who have food and clothing with which to purchase 
it — increasing steadily the wealth, strength, and power of these latter, 
while making the former poorer and more enslaved. Look around you, 
in New York, at the present moment, and study the effects, in this re- 
spect, of the still-enduring crisis of 1857. Turn back to those of 1822 
and 1842, and see tow strong has been their tendency to compel the 
transfer of property from the hands of persons of moderate means to 
those of men who were already rich — reducing the former, with their 
wives and children, in thousands, if not even hundreds of thousands of 
cases, to the condition of mere laborers, while largely augmenting the 
number and the fortunes of "merchant princes" who have no need to 
live by labor. Look around yon and study the growth in the number 
of your millionaires, side by side with a pauperism now exceeding in its 
proportions that of Britain, or even that of Ireland. Look next to the 
condition of the men who labor throughout the country, deprived as they 
have been, and yet are, of anything approaching to steadiness of demand 
for their services, in default of which they have been, for two years past, 
unable suitably to provide for their wives, their children, or themselves. 
Study then the condition of the rich money-lenders throughout the coun- 

(3) 



4 FINANCIAL crises: 

try, enabled, as they have been, to demand one, two, three, and even 
four and five per cent per month, from the miners, manufacturers, and 
little farmers of the Union, until these latter have been entirely eaten 
out of house and home. Having done all this, you can scarcely fail to 
arrive at the conclusion, that unsteadiness in the societary movement 
tends towards slavery — that steadiness therein, on the contrary, tends 
towards the emancipation of those who have labor to sell from the domi- 
nation of those who require to buy it — and that, therefore, the question 
referred to in the passage I have quoted, is one of the highest interest to 
all of those who, like yourself, are placed in a position to guide their 
fellow-men in their search for prosperity, happiness, and freedom. 

The larger the diversity in the demand for human powers, the more 
perfect becomes the division of employments, the larger is the produc- 
tion, the greater the power of accumulation, the more rapid the in- 
crease of competition for the purchase of the laborer's services, and the 
greater the tendency towards the establishment of human freedom. The 
greater that tendency, the more rapid becomes the societary action 
— its regularity increasing with every stage of progress. In proof of 
this, look to that world in miniature, your own printing-office, studying 
its movements, as compared with those of little country offices, in which 
a single person not unfrequently combines in himself all the employments 
that with you are divided among a hundred, from editor-in-chief to news- 
boy. The less the division of employments, the slower and more unsteady 
becomes the motion, the less is the power of production and accumu- 
lation, the greater is the competition for the sole of labor, and the greater 
is the tendency towards the enslavement of the laborer, be he black or 
white. 

The nearer the consumer to the producer, the more instant and the 
more regular become the exchanges of service, whether in the shape 
of labor for money, or food for cloth. The more distant the producer 
and consumer, the slower and more irregular do exchanges become, and 
the greater is the tendency to have the laborer suffer in the absence of 
the power to obtain wages, and the producer of wool perish of cold in 
the absence of the power to obtain cloth. That this is so, is proved by 
an examination of the movements of the various nations of the world, 
at the present moment. Being so, it is clear, that if we would avoid 
those crises of which you have spoken — if we would have regularity of 
the societary movement — and if we would promote the growth of free- 
dom — we must adopt the measures needed for bringing together the pro- 
ducers and consumers of food and wool, and thus augmenting their power 
to have commerce among themselves. 

The essential characteristic of barbarism is found in instability and 
irregularity of the societary action — evidence of growing civilization 
being, on the contrary, found in a constantly augmenting growth of that 
regularity which tends to produce equality, and to promote the growth 
of freedom. Turn, if you please, to the Wealth of Nations, and mark the 
extraordinary variations in the prices of wheat in the days of the Plan- 
tagenets, from six shillings, in money of the present time, in 1243, to 
forty-eiyht in 1246, seventy-two in 1257, three hundred and thirty-six in 
1270, and tioenty-eight in 1286. That done, see how trivial have been 
the changes of France and England, from the close of the war in 1815, 



THEIR CAUSES AND ErPECTS. 5 

to the present time. Next, turn to Russia, and mark the fact, given to 
us by a recent British traveller, that, in those parts of the country that 
have no manufactures, the farmer is everywhere " the victim of circum- 
stances " over which he has no control whatsoever — the prices of his pro- 
ducts being dependent entirely upon the greater or smaller size of the 
crops of other lands, and he being ruined at the very moment when the 
return to his labor has been the most abundant. Look then to the changes 
throughout our own great West in the present year — wheat having fallen 
from $1.30 in May to 50 cts. in July — and you will see how nearly the 
state of things with us approximates to that of Russia. Compare all this 
with the movements of England, France, and Germany, and you will, 
most assuredly, be led to arrive at the conclusion, that the stability whose 
absence you deplore, is to be sought by means of measures looking to the 
close approximation of the producer and the consumer, and to the ex- 
tension of domestic commerce. 

Five years since, British journals nearly all united in predicting the 
advent of a great financial crisis, the seat of which would be found in 
France and Germany. More careful observation might have satisfied 
them that the tendency towards such crises was always in the direct ratio 
of the distance of consumers from producers, and that the real places 
in which to look for that which was then predicted, were those coun- 
tries which most seemed bent on separating the producers and consu- 
mers of the world, Britain and America — the one seeking to drive all its 
people into the workshops, and the other laboring to compel them all to 
seek the fields, and both thus acting in direct defiance of the advice of 
Adam Smith. The crisis came, spending its force upon tliose tioo coun-^ 
tries — France, Belgium, and Germany escaping almost entirely unharmed, 
and for the reason, that in all these latter the farm and the workshop 
were coming daily more near together, and commerce was becoming more 
rapid, free, and regular. 

Russia and Sweden have, however, sufi"ered much — the crisis having 
become, apparently, as permanent as it is among ourselves. Why should 
this be so ? Why should they be paralyzed, while France and Germany 
escape uninjured ? Because, while these latter have persisted in main- 
taining that protection which is needed for promoting the approximation 
of producers and consumers, the former have, within the last three years, 
departed essentially from the system under which they had been so rapidly 
advancing towards wealth and freedom — adopting the policy advocated 
by those writers who see in the cheapening of the labor and of the raw 
materials of other countries, the real British road to wealth and power. 

Throughout Northern and Central Europe, there has been, in the last 
half century, a rapid increase in the steadiness of the societary move- 
ment, and in the freedom of man — that increase being the natural con- 
sequence of increased rapidity of motion resulting from a growing diver- 
sification in the demand for human services, and growing competition 
for the purchase of labor. In Ireland, India, Spanish America, and 
Turkey, the reverse of this is seen — producers and consumers beco- 
ming more widely separated, and exchanges becoming more fitful and 
irregular, with growing competition for the sale of labor. Why this 
difi'erence ? Because the policy of the former has been directed towards 
protecting the farmer in his efibrts to draw the market nearer to him, 



6 riNANCiAL crises: 

and tliTis diminisli the wasting tax of transportation, wtile tte latter 
have been steadily becoming more and more subjected to the system 
which seeks to locate in the little island of Britain the single workship 
of the world. 

How it has been among ourselves, is shown in the following brief 
statement of the facts of the last half century. From the date of the 
passage of the act of 1816, by which the axe was laid to the root of our 
then-rapidly-growing manufactures, our foreign trade steadily declined, 
until, in 1821, the value of our imports was less than half of what it 
had been six years before. Thenceforward, there was little change until 
the highly-protective act of 1828 came fairly into operation — the ave- 
rage amount of our importations, from 1822 to 1830, having been but 
80 millions — and the variations having been between 96 millions in one 
year and 70 in another. Under that tariif, the domestic commerce grew 
with great rapidity — enabling our people promptly to sell their labor, 
and to become better customers to the people of other lands, as is shown 
by the following figures, representing the value of goods imported : 

1830-31..., $103,000,000 

1831-32 101,000,000 

1832-33 108,000,000 

1833-34 126,000,000 

Here, my dear sir, is a nearly regular growth — the last of these years 
being by far the highest, and exceeding, by more than 50 per cent, 
the average of the eight years from 1822 to 1830. In this period, not 
only did we contract no foreign debt, but we paid ofi" the whole of that 
which previously had existed, the legacy of the war of independence ; 
and it is with nations as with individuals, that '' out of debt is out of 
danger." 

The compromise tariff began now to exert its deleterious influence 

— stopping the building of mills and the opening of mines, and thus 
lessening the power to maintain domestic commerce. How it operated on 
that with foreign nations, is shown in the facts, that the imports of 
1837 went up to ^189,000,000, and those of 1838 down to $113,000,000 

— those of 1839 up to $162,000,000, and those of 1840 down to 
$107,000,000 ; while those of 1842 were less than they had heen ten years 
before. In this period, we ran in debt to foreigners to the extent of 
hundreds of millions, and closed with a bankruptcy so universal, as to 
have embraced individuals, banks, towns, cities. States, and the national 
treasury itself. 

That instability is the essential characteristic of the system called free- 
trade, will be obvious to you on the most cursory examination of the 
facts presented by the several periods of that system through which we 
have thus far passed. From more than $100,000,000, in 1817, our im- 
ports fell, in 1821, to $62,000,000. In 1825, they rose to $96,000,000, 
and then, two years later, they were but $79,000,000. From 1829 to 
1834, they grew almost regularly, but no sooner had protection been 
abandoned, than instability, with its attendant speculation, reappeared 
— the imports of 1836 having been greater, by 45 per cent, than those 
of 1834, and those of 1840 little more than half as great as those of 1836. 

Once again, in 1842, protection was restored ; and once again do we 



THEIR CAUSES AND EErECTS. 7 

find a steady and regular growth in the power to maintain intercourse 
with the outer world, consequent upon the growth of domestic commerce, 
as is shown in the following figures : 

1843-44 $108,000,000 

1844-45 117,000,000 

1845-46 121,000,000 

,1846-47 146,000,000 

We have here a constant increase of power to go to foreign markets, 
accompanied by a constant decrease in the necessity for resorting to them 
— the domestic production of cotton and woollen goods having doubled 
in this brief period, while the domestic production of iron had more 
than trebled. * 

Twelve years having elapsed since the tariff of 1846 became fairly 
operative, we have now another opportunity for contrasting the operation 
of that policy under which Russia and Sweden are now suffering, with 
that of the one under which they had made such rapid progress — that 
one which is still maintained by Germany and by France. Doing this, 
we find the same instability which characterized the periods which pre- 
ceded the passage of the protective tariff acts of 1824, 1828, and 1842, 
and on a larger scale — the imports having been ^178,000,000 in 1850, 
$304,000,000 in 1854, ^260,000,000 in 1855, $360,000,000 in 1857, 
$282,000,000 in 1858, and $338,000,000 in 1859 — and our foreign 
debt, with all its tendency towards producing those crises which you so 
much deplore, having been augmented probably not less than tJiree hun- 
dred millions of dollars. 

Ten years since, there was made the great discovery of the Califor- 
nian gold deposits — a discovery whose effect, we were then assured, was 
to be that of greatly reducing the rate of interest paid by those who 
labored to those others who were already rich. Have such results been 
thus far realized ? Are not, on the contrary, our workingmen — our 
miners and manufacturers, our laborers and our settlers of the West — 
now paying thrice the price for the use of money that was paid at the 
date of the passage of the tariff act of 1846 ? Are not these latter, at 
this moment, paying three, four, five, and even as high as six per cent 
per month? Are they not paying moxe per month, than is paid jjer yea/* 
by the farmers of the protected countries of the European world ? That 
they are so, is beyond a doubt. Why it is so is, that although we have 
received from California five hundred millions of gold, we have been 
compelled to export, in payment for foreign food in the form of iron 
and lead, cloths and silks, more than four hundred millions — leaving 
behind little more than has been required for consumption in the arts. 
Had we made our own iron and our own cloth, thus making a domestic 
market for the products of our farms, would not much of this gold have 
remained at home ? Had it so remained, would not our little farmers 
find it easier to obtain the aid of capital at the rate of six per cent 
per annum, than they now do at three, four, or five per cent per month ? 
Would not their power of self-government be far greater than it is now, 
under a system that, as we see, makes the poor poorer, while the very 
rich grow richer every day ? Refiect, I pray you, upon these questions 
and these facts, and then answer to yourself if the crises of which you 



b FINANCIAL crises: 

speak are not the necessary results of an erroneous policy of wliicli, 
during so long a period, you have been the steady advocate. 

The history of the Union for the past half century may now briefly 
thus be stated : We have had three periods of protection, closing in 
1817, 1834, and 1847, each and all of them leaving the country in a 
state of the highest prosperity — competition for the purcliase of labor 
then growing daily and rapidly, with constant tendency towards increase 
in the amount of commerce, in the steadiness of the societary action, 
and in the freedom of the men who needed to sell their labor. 

We have had three periods of that system which looks to the destruc- 
tion of domestic commerce, and is called free trade — that system which 
prevails in Ireland and India, Portugal and Turkey, and is advocated by 
British journalists — each and all of them having led to crises such as 
you have so well described, to wit, in 1822, 1842, and 1857. In each 
and every case, they have left the country in a state of paralysis, similar 
to that which now exists. In all of them, the exchanges have become 
more and more languid, the societary movement has become more and 
more irregular, and the men who have needed to sell their labor have 
become more and more mere instruments in the hands of those who had 
food and clothing with which to purchase it. 

All experience, abroad and at home, tends, thus, to prove that men 
become more free as the domestic commerce becomes more regular, 
and less and less free as it becomes more and more fitful and disturbed. 
Such being the case, the questions as to the causes of crises, and as to 
how they may be avoided, assume a new importance — one greatly 
exceeding, as I imagine, that which you felt disposed to attach to them 
when writing the passage which has above been given. To my appre- 
hension, they are questions of liberty and slavery, and therefore it is 
that I feel disposed to invite you, as a friend of human freedom, to 
their discussion through the columns of your own journal, the Evening 
Post — that discussion to be carried on in the spirit of men who seek for 
truth, and not for victory. If you can satisfy me that I am in error as 
to either facts or deductions, I will at once admit it; and you, I feel 
assured, will do the same. As an inducement to such discussion, I now 
offer to have all your articles reprinted in protectionist journals, to the 
extent of 300,000 copies — thereby giving you not less than a million 
and a lialf of readers, among the most intelligent people of the Union. 
In return, I ask of you only, that you will publish my replies in your 
single journal, with its circulation of, as I am told, fifteen or twenty 
thousand. That this is offering great odds, you must admit. 

It may, however, be said, that the replies might be such as would 
occupy too large a portion of your paper ; and to meet that difficulty, I 
now stipulate that they shall not exceed the length of the articles to 
which answers are to be given — thus leaving you entire master of the 
space to be given to the discussion. Hoping to hear that you assent to 
this proposition, I remain, very respectfully, 

Your obedient servant, 

Henry C. Carey. 
W. C. Beyant, Esq. 

Philadelphia, December 27, 1859. 



THEIR CAUSES AND EFFECTS. 



LETTEE SECOND. 



Dear Sir. — Allow me now to ask you why it is, tliat great specula- 
tioas, followed by crises and by almost total paralyses, such, as you have 
so well described, alioays occur in free trade times, and never in periods 
when the policy of the country is being directed towards the creation 
of domestic markets, and towards the relief of our farmers from the 
terrific taxes of trade and transportation to which they are now subjected ? 
That such are the facts, you can readily satisfy yourself by looking back 
to the great speculations of the four periods of 1817, 1836, 1839, and 
1856, followed by the crises of 1822, 1837, 1842, and 1857 — and then 
comparing them with the remarkable steadiness of movement which cha- 
racterised those of the protective tariffs of 1828 and 1842. Study our 
financial history as you may, you will find in its every page new evidence 
of the soundness of the views of Washington, Jefferson, and Hamilton, 
Adams, Madison, and Monroe, each and all of whom had full belief in 
the accuracy of the ideas so well enunciated by General Jackson, when 
he declared that we "had been too long subject to the policy of British 
merchants" — that it was " time we should become a little more Ameri- 
canized" — and that, if we continued longer the policy of feeding "the 
paupers and laborers of England" in preference to our own, we should 
" all be rendered paupers ourselves." 

Why is all this ? Why must it be so ? Why must, and that inevi- 
tahly, speculation, to be followed by crises, paralyses, and daily-growing 
pauperism, be the invariable attendant upon the policy which looks to 
the separation of the producer of raw products from the consumer of 
the finished commodities into which rude materials are converted ? To 
obtain an answer to all these questions, let us look again, for a moment, 
to the proceedings connected with the printing and publication of the 
Evening Post. Dealing directly with your paper-maker, you pay him cash, 
or give him notes, in exchange for which he readily obtains the money 
— no artificial credit having been created. Place yourself now, if you 
please, at a distance of several thousand miles from the manufacturer, 
and count the many hands through which your paper would have to 
pass — each and every change giving occasion to the creation of notes 
and bills, and to the charge of commissions and storage ; and you will, as 
I think, be disposed to arrive with me at the conclusion, that the tendency 
towards the creation of artificial credits, and towards speculation, grows 
with the growth of the power of the middleman to tax the producers 
and consumers of the world. 

Seeking further evidence of this, let me ask you to look at the cir- 
cumstances which attend the sale of your products. Now, your custo- 
mers being close at hand, you are paid in cash — ^your whole year's busi- 
ness not giving, as I suppose, occasion for the creation of a single note. 
Change your position, putting yourself in that of the Manchester manu- 
facturers, at a distance of thousands of miles from your customers, com- 
pelled to deal with traders and transporters, and study the quantity of 



10 PINANCIAL CRISES : 

notes and bills, Avitli their attendant charges, that would be created — the 
augmentation of price and diminution of consumption that would be the 

consequence the power that would be accumulated in the hands of those 

who had money to invest, and desired to produce such crises as those 
which you have so well depicted — and you will, most assuredly, arrive at 
the conclusion that there is but one road towards steadiness and free- 
dom, and that that road is to be found in the direction of measures having 
for their object the more close approximation of the producers and con- 
sumers of the products of the earth. 

Studying next the great facts of our financial history, with a view to 
ascertain how far they are in accordance with the theory you may thus 
have formed, you will see that, in those prosperous years of the tariff of 
1828, from 1830 to 1833, the quantity of bank notes in circulation was 
but 80 millions. No sooner, however, had we entered upon the free 
trade policy, providing for the gradual diminution and ultimate aboli- 
tion of protection, than we find a rapid growth of speculation, conse- 
quent upon the growing power for the creation of artificial credits — the 
average circulation of the years from 1834 to 1837 having been no less 
than 149 millions, or nearly twice what it before had been. Under 
the protective tariff of 1842, the average was but 76 millions ; but no 
sooner had protection been abandoned, than we find an increase so rapid 
as to have carried up the average from 1846 to 1849, to 113, and that of 
1850 and 1851, to 143 millions. In that period speculation had largely 
grown, but prosperity had as much declined. When the circulation was 
small, domestic commerce was great — mines having been opened, fur- 
naces and factories having been built, and labor having found its full 
reward. When, on the contrary, the circulation had become so great, 
mines were being closed and miners were being ruined — furnaces and 
factories were being sold by the sheriff, and our people were unemployed. 
In the one case, men were becoming more free, while in the other they 
were gradually losing the power to determine for themselves to whom 
they would sell their labor, or what should be its reward. In the one, 
there was a growing competition for the ]^wclia&e of the laborer's ser- 
vices. In the other, there was increasing competition for their sale. Such 
having invariably been the case, can you, my dear sir, hesitate to believe, 
that the question to whose discussion I have invited you, is not one 
of the prices of cotton or woollen cloths, but is, really, that of man's pro- 
gress towards that perfect freedom of action which we should all desire 
for ourselves and those around us, on the one hand, or his decline towards 
slavery, and its attendant barbarism, on the other ? That, as it seems to 
me, you can scarcely do. 

At no period in the history of the Union has competition for the pur- 
chase of labor, accompanied by growing tendency towards improvement 
in the condition of the laborer, been so universal or so great as in 1815, 
1834, and 1847, the closing years of the several periods in which the 
policy of the country was directed towards the approximation of the 
producers and consumers of the country, by means of measures of pro- 
tection. At none, has the competition for its sale, with corresponding 
decline in the laborer's condition, been so great as in the closing years 
of the free trade periods, to wit, from 1822"to 1824, and from 1840 to 
1842. 



THEIR CAUSES AND EFFECTS. 11 

Grreat as was the prosperity with which we closed the period which had 
commenced in this latter year, three short years of the tariff of 1846 
sufficed for reproducing that competition for the sale of labor, relief from 
which had been the object of the men who made the tariff of 1842. 
From the decline with which we then were menaced, we were relieved 
by the discovery of the Californian mines, and by that alone. Since 
then, we have thence received more than five hundred millions of gold, 
and yet at no period has there existed a greater tendency to increase 
of competition for the sale of labor than at present — the two cities of 
New York and Philadelphia, alone, presenting to our view hundreds of 
iliousands of persons wlio are totally unahle to exchange their services for 
the money with tohich to purchase food and clothing. Is it not clear, 
from all these facts, that — 

First, the nearer the place of consumption to the place of production, 
tlie smaller must be the power of transporters and other middlemen to 
tax consumers and producers, and the greater must be the power of the 
men who labor to profit by the things produced ? 

Second, that the more close the approximation of consumers and pro- 
ducers, the smaller must be the power of middlemen to create fictitious 
credits, to be used in furtherance of their speculations ? 

Third, that the greater the power of the men who labor, and the larger 
their reward, the greater must be the tendency towards that steadiness 
in the soeietary action, in the perfection of which you yourself would 
find the proof of " infallible wisdom in those who conduct its operations" ? 

Fourth, that all the experiences of continental Europe, and all our 
own, tend to prove that steadiness is most found in those countries, and 
at those periods, in which the policy pursued is that protective one ad- 
vocated in France by the great Colbert, and among ourselves by Wash- 
ington, Franklin, Hamilton, Adams, Jefferson, and their successors, down 
to Jackson ; and least in all of those in which the policy pursued is that 
advocated by the British school, which sees in cheap labor and cheap 
raw materials the surest road to wealth and power for the British trader ? 

Renewing my proposition to cause your answers to these questions to 
be republished to the extent of not less than 300,000 copies, I remain, 
my dear sir, with great respect. 

Your obedient servant, 

Henry C. Carey. 
W. C. Bkyant, Esq. 

Philadelphia, January 3, 1860. 



12 FINANCIAL CRISES 



LETTER THIRD. 

Dear Sir. — In one of his Ifount Vernon Papers, Mr. Everett in- 
forms his readers, that — 

"The distress of the year 1857 was produced by an enemy more formidable 
than hostile armies ; by a pestilence more deadly than fever or plague ; by a visi- 
tation more destructive than the frosts of Spring or the blights of Summer. I 
believe that it was caused by a mountain load of Debt. The whole country, in- 
dividuals and communities, trading-houses, corporations, towns, cities, States, 
were laboring under a weight of debt, beneath which the ordinary business rela- 
tions of the country were at length arrested, and the great instrument usually 
employed foi' carrying them on, Ceedit, broken down." 

This is all very true — a crisis consisting in the existence of heavy 
debts requiring to be paid by individuals, banks, and governments, at a 
time when all desire to be paid, and few or none are able to make the 
payments. That admitted, however, we are not, so far as I can see, 
much nearer than we were before to such explanation of the causes of 
crises, as is required for enabling us to determine upon the mode of 
preventing the recurrence of evils so frightful as are those you have so 
well described. Why is it, that our people are so much more burthened 
with debt than are their competitors in Europe ? Why is it, that it so 
frequently occurs among ourselves that all need to be paid, and so few 
are able to pay ? Why is it, that crises always occur in free-trade times ? 
Why is it, that they never occur in protective times ? Why is it, that 
it so frequently occurs that those who are rich are enabled to demand 
from the poor settlers of the West, as much per month, in the form of 
interest, as is paid per year, by the farmers of England, France, and Ger- 
many ? These are great questions, to which Mr. Everett has furnished 
no reply. Let us have them answered, and we shall have made at least 
one step toward the removal of the evils under which our people so 
greatly suffer. 

Let us try, my dear sir, if you and I cannot do that which Mr. Eve- 
rett has failed to do — ascertaining the cause of the existence of so much 
debt, the constant preliminary to that absence of confidence which impels 
all to seek payment, while depriving so nearly all of tke power to pay. 

The commodity that you and I, and all of us, have to sell, is labor — 
human effort, physical or mental. It is the only one that perishes at the 
moment of production, and that, if not then put to use, is lost forever. 
The man who does put it to use, need not go in debt for the food and 
clothing required by his family; but he who does not, must either con- 
tract debt, or his family must suffer from want of nourishment. Such 
being the case, the necessity for the creation of debt should diminish 
with every increase in that competition for the purchase of labor, which 
tends to produce an instant demand for the forces, physical or mental, 
of each and every man in the community — such competition resulting 
from the existence of a power on the part of each and every other man 
to offer something valuable in exchange for it. On the contrary, it 



THEIR CAUSES AND EEFECTS. 13 

stould increase with every increase in the competition for the sale of 
labor, resulting from the absence of demand for the human forces that 
are produced. In the one case, men are tending towards freedom, 
whereas, in the other, they are tending in the direction of slavery — the 
existence of almost universal debt being to be regarded as evidence of 
growing power, on the part of those who are already rich, to control the 
movements of those who need to live by the sale of labor. 

Where, now, is debt most universal and most oppressive ? For an 
answer to this question, let me beg that you will look to India, where, 
since the annihilation of her manufactures, the little proprietor has almost 
disappeared, to be replaced by the wretched tenant, who borrows at fifty, 
sixty, or a hundred per cent, per annum, the little seed he can afford to 
use, and finds himself at last driven to rebellion by the continued exac- 
tions of the money-lenders and the government. Turn, next, to those 
parts of Russia where there are no manufactures, and find in the free- 
trade book of M. Tegoborski his statement of the fact, that where there 
is no diversification of pursuits the condition of the slave is preferable 
to that of the free laborer. Pass thence to Turkey — finding there an 
universality of debt that is nowhere else exceeded. Look, next, to 
Mexico, and find the poor laborer, overwhelmed with debt, passing into 
servitude. Pass on to Ireland, and study the circumstances which pre- 
ceded the expulsion, or Kstarvation, in ten short years, of a million and 
a half of free white people — that expulsion having been followed by the 
passage of an Act of Parliament for expelling, in their turn, the owners 
of the land from which those laborers had gone. Look where you may, 
you will see that it is in those communities of the world which are most 
limited t* the labors of the field, that debt is most universal, and that 
the condition of the people is most akin to slavery — and for the reason 
that there it is, that there is least competition for the purchase of labor. 
There, consequently, there is the greatest waste of the great commodity 
which all of us must sell, if we would have the means of purchase. 

Turn, now, if you please, to Central and Northern Europe, and there 
you will find a wholly difierent picture — competition for the purchase 
of labor being there steadily on the increase, with constant augmenta- 
tion of the rapidity of commerce — constant increase in the power to 
economize the great commodity of which I have spoken — and, as a ne- 
cessary consequence, constant diminution in the necessity for the con- 
traction of debt. Why should such remarkable difierences exist ? Be- 
cause, in all of these latter countries, the whole poHcy of the country 
tends towards emancipation from the British free-trade system, whereas 
India, Ireland, Turkey, and Mexico, are becoming from day to day more 
subject to it. 

Looking homeward, we may now, my dear sir, inquire when it has 
been, that the complaint of debt has been most severe. Has it not been 
in those awful years which followed the free-trade speculations of 
1816-17 ? Has it not been in that terrific period which followed the 
free-trade speculations of '37 to '40 — that period in which a bankrupt 
law was forced from Congress, as the only means of enabling tens of 
thousands of industrious men to enter anew upon the business of life ? 
Has it not been in the years of the present free-trade crisis, which pre- 
sent to view private failures of almost five hundred millions in amount? 



14 . FINANCIAL crises: 

When, on the other hand^ has there been least complaint ? Has it not 
been in those tranquil years which followed the passage of the protective 
tariffs of '28 and '42 ? That it has been so, is certain. Why should it 
so have been ? Because in protective times every man has found a pur- 
chaser for his labor, and has been thereby relieved from all necessity for 
contracting debt; whereas, in free-trade times, a large portion of the labor 
power produced has remained unemployed, and its owners, unahle to sell 
their one commodity/, have been forced to choose between the contraction 
of debt on the one hand, or famine and death on the other. 

Look next, my dear sir, to our public debt, and mark its extinction 
under the tariff of ^28-— its revival under the compromise tariff — its 
reduction under that of '42 — and then study the present situation of a 
national treasury that, in time of perfect peace, is running in debt at 
the rate of little less than $20,000,000 a-year ! 

Turn then, if you please, to our debt to foreigners, which was annihx' 
lated under the tariff of '28 — swelled to hundreds of millions under the 
tariff of '33 — and since so much enlarged, under the tariffs of '46 and 
'b1, that the enormous sum of $30,000,000 is now required for the payr 
ment of its annual interest. 

France, with a population little larger than our own, and one far less 
instructed, maintains an army of 600,000 men — carries on distant wars 
— builds magnificent roads — enlarges her marine and fortifies her ports 
— and does all these things with so much ease, that when the govern- 
ment has suddenly occasion for $100,000,000, the whole is supplied 
at home, and without an effort. Belgium and Germany follow in the 
same direction — not only making all their own roads, but contributing 
largely to the construction of those which are used for carrying out the 
rude products of our land, and bringing back the cloth, the paper, and 
the iron, that our own people, now unemployed, would gladly make at 
home. They are rapidly becoming the bankers of the world, for they 
live under systems even more protective than were those of our tariffs 
of '28 and '42. We, on the contrary, are rapidly becoming the great 
paupers of the world — creating seven, eight, and ten per cent bonds, 
and then selling them at enormous discounts, to pay for iron so poor in 
quality that our rails depreciate at the rate of five, six, and even ten per 
cent a-year. 

Looking at all these facts, is it not clear, my dear sir — 
That the necessity for the contraction of debt exists, throughout the 
world, in the ratio of the adoption of the free-trade system of which you 
are the earnest advocate ? 

That the greater the necessity for the contraction of debt, the greater 
is the liability to the recurrence of commercial crises such as you have 
so well described ? 

That the more frequent the crises, the greater is the tendency towards 
the subjection of the laborer to the will of his employer, and towards 
the creation of slavery even where it has at present no existence ? And, 
therefore — 

That it is the bounden duty of every real lover of freedom to labor 
for the re-establishment of the protective system among ourselves ? 



THEIR CAUSES AND EFEECTS. 15 

At foot * is given, as you see, your notice of refusal to enter upon the 
discussion to which you have been invited. For a reply thereto, permit 
me, my dear sir, to refer you to the following exposition of your own 
views in relation to free discussion, given by yourself, a few days since, 
in the Evening Post : 

"Those Political Lectures. — As our readers know, a project has been under 
consideration to give a course of political lectures in this city during the present 
winter, and in which our prominent politicians of all parties were to be invited 
to take a part. We now understand that the scheme has fallen through, mainly 
because no single Democrat could be found who was willing to ventilate his party 
opinions, and maintain them, in connection with a series of similar addresses by 
Republican, Radical, and American speakers. We are assured that of twenty 
Northern and Southern Democratic statesmen, who have been invited, not one has 
accepted the invitation. It is proper to say that the signatures to the letter in- 
viting speakers represented a number of our very foremost citizens, of all shades 
of politics. If a letter, so respectably signed as to guarantee every courtesy to 
all who took part in the course, failed to secure at least one speaker to uphold 
Democratic principles, we may safely suggest that the old soubriquet of the "un- 
terrified Democracy" is a misnomer. We regret the failure of the proposed 
course of lectures, but are glad to know that many Republicans were willing to 
participate. Why cannot we have a few Republican speakers in an independent 
course ? " 

Obviously, these Democrats fear discussion. For years, they have 
been advocating doctrines that will not bear examination before the 
people. What, however, shall we say to the free-trade advocates ? Is 
there any one of them that would accept a proposition like to the one to 
which you have here referred ? Would they even accept an offer that 
was so much better than this, that it would give them, of cool and reflect- 
ing readers, /Ive hundred times as m,any as you could give to any Demo- 
crat, of mere auditors ? Would Mr. Halloek, of the Journal of Com- 
merce, accept the magnificent offer I have made to you, which, thus far, 
you have not accepted ? Would it be accepted by Mr. G-reene, of the 
Boston Morning Post ? Will you accept it ? If you will not, can you 
object to the course of the Democratic leaders to whom you have here 
referred? Scarcely so, as I think. 

Hoping to hear that you have reconsidered the question, and have 
decided to accede to a proposition which will enable you to address to a 
million and a half of readers, all the arguments that can be adduced in 
support of free-trade doctrines, I remain, my dear sir. 

Very truly and respectfully yours, 

Henry C. Carey. 
W. C. Bryant, Esq. « 

Philadelphia, January 17, 1860. 

* "Mr. Carey's Challenge. — Mr. Henry C. Carey, of Philadelphia, known 
by various works on political economy, has challenged Mr. Bryant, one of the 
editors of this paper, to a discussion, in the newspapers, of the question of cus- 
tom-house taxation. In behalf of Mr. Bryant, we would state that challenges of 
this kind he neither gives nor accepts. It would almost seem like affectation on 
his part to say that he has not read the letters — two in number, he is told — in 
which this defiance is given on the part of Mr. Carey, having, unfortunately, too 
little curiosity to see in what terms it is expressed ; but as such is the fact, it is 
well perhaps to mention it. His duties as a journalist, and a commentator on the 
events of the day and the various interesting questions which they suggest, leave 



16 riNANCiAL crises: 

him no time for a sparring-match with Mr. Carey, to "which the public, after a little 
•while, ■would pay no attention ; and if he had ever so much time, and the public 
were ever so much interested in what he had to say, he has no ambition to distin- 
guish himself as a public disputant. His business is to enforce what he considers 
important political traths, and refute what seem to him errors, just as the occa- 
sions arise, and to such extent as he imagines himself able to secure the attention 
of those who read this journal, and he will not turn aside from this course to tie 
himself down to a tedious dispute concerning the tariff question at any man's 
invitation. 

" The question of the tariff is not the principal controversy of the day. It may 
seem so to Mr. Carey, who is suffering under a sort of monomania, but the public 
mind is occupied just now with matters of graver import. To them it is proper 
that a journalist should principally address himself, until they are disposed of. 
He may make occasional skirmishes in other fields of controversy, but here is the 
main battle. When the tariff question comes up again, it will be early enough to 
meet it; and even then, a journalist who understands Ms vocation would keep 
himself free to meet it in his own way. 

" If Mr. Carey is anxious to call out some antagonist with whom to measure 
weapons in a formal combat, and can find nobody who has an equal desire with 
himself to shine in controversy, we can recommend to him a person with whom he 
can tilt to his heart's content. One Henry C. Carey, of Philadelphia, published, 
some twenty years since, a work in three volumes, entitled ' Principles of Political 
Economy,' in which he showed, from the experience of all the world, that the 
welfare of a country is dependent on its freedom of trade, and that, in proportion 
as its commerce is emancipated from the shackles of protection, and approaches 
absolute freedom, its people are active, thriving, and prosperous. We will put 
forward Henry C. Carey as the champion to do battle with Henry C. Carey. This 
gentleman, who is now so full of fight, will have ample work on his hands in de- 
molishing the positions of his adversary, with which he has the great advantage 
of being already perfectly familiar. When that is done, which will take three or 
four years at the least, inasmuch as both the disputants are voluminous writers, 
we would suggest that he give immediate notice to his associates, the owners of 
the Pennsylvania iron-mills, who will doubtless lose no time in erecting a cast-iron 
statue in honor of the victor." 



THEIR CAUSES AND ErFECTS. 17 



LETTER FOURTH. 

Dear Sir. — In the notice of your refusal to enter upon the discus- 
sion to whicli you have been invited, it is said that you " had not read 
the letters " that had been addressed to you. That such had been the 
case, is not at all improbable ; but how far a great public teacher, as 
you undoubtedly are, can be held justified in closing his eyes when 
invited to a calm examination of the question whether his teachings tend 
in the direction of prosperity and freedom for the laborer, on the one 
hand, or toward pauperism and slavery on the other, seems to me to be 
far less certain. Placed myself in his situation, I should regard it_ as 
one of great responsibility — one in which erroneous action, resulting 
from failure to give to the subject the fullest and fairest examination, 
would be little short of the wilful and deliberate commission of crime. 
That you agree with me in this, I cannot, even for a moment, doubt. 

That you had not read the notice served upon me, I regard as abso- 
lutely certain, and for the reason, that its tone and manner are entirely 
unworthy of you, and you would not, I am sure, permit anything to be 
said by others for you, that you would not say yourself. Further, you 
are there placed in the false position of doing what I know you would 
not do — shrinking from responsibility, by permitting yourself to be pre- 
sented to the world as being only " one of the editors" of the Fost, in- 
stead of the editor, as you are so well known to be. Mr. Greeley is the 
editor of his paper, and, as such, endorses the opinions, given editorially, 
of the many gentlemen by whom he is aided. So^ too, is it with your- 
self; and the rule of looking to the endorser when the drawer cannot 
be found, applies in this case as fully as it can do in that of a promis- 
sory note. So far as I can recollect, the editor of the Tribune has never 
shrunk from any such responsibility — having repeatedly replied, oyer 
his own signature, to papers addressed to himself in reference to editorials 
that he had published. Quite sure I am, that were you now to cite him 
before the world, as I have cited you, demanding an examination of the 
principles upon which he had based his advocacy of protection, he would 
most gladly meet you — giving to all you had to say the benefit of his 
enormous circulation, and leaving his readers to decide for themselves, 
after calm perusal of your arguments. Like you, he might find it quite 
impossible to give to the question all the attention it might demand, but, 
in that case, he would, most assuredly, find some one to take his place — 
becoming responsible, as editor, as fully as if he alone had written. Like 
him, you are surrounded by persons who have treated this subject on hun- 
dreds, if not even thousands, of occasions — you making yourself respon- 
sible for all they have thus far said; and I am, therefore, at a loss to un- 
derstand why you should now fail to profit by the admirable opportunity 
ofi'ered you, for establishing the truth of free-trade doctrines. Can it be, 
that their advocates dare not meet the question ? If so, are they not 
now placing themselves in a situation precisely similar to that so recently 
described by you, in speaking of your Democratic opponents ? 
2 



18 v_ FINANCIAL crises: 

1 am told, however, that this is not the principal question of the day. 
It may not be so with the people of your city, hut you would greatly err, 
were you to suppose that such was the case with those of the States 
south and west of you, and north of Mason and Dixon's line. In this 
State and Jersey, it is the one, and almost the only question. In Ohio, 
a large majority of the Republican senators are stated to have announced 
their distinct intention to make it the question. In Illinois, the most 
influential of all the Republican journals of the State has entirely aban- 
doned the free-trade doctrines — giving itself now to the advocacy of pro- 
tection. Throughout the West, the question of the adoption of measures 
required for the creation of domestic markets, and for the emancipation 
of the country from the control of British manufacturers, is rapidly 
taking the place heretofore so exclusively occupied by the anti-slavery 
one. All of these people may be wrpng, and, if so, they should be set 
right. That they may be so, I have offered you the use of the columns 
of protectionist journals, circulating, to the extent of hundreds of thou- 
sands of copies, among the very persons who are thus in error. That 
great offer it is that, thus far, you have not accepted. 

The great question of the day, in your estimation, is that of slavery 
and freedom, and in this we are entirely agreed. How is it that men 
may be made more free ? That is the question, and it must be answered 
before we can venture upon action, unless we are willing to incur the 
risk of promoting the growth of slavery, while really desiring to advance 
the cause of freedom. All experience shows, that men have become 
more free as they have been more and more enabled to work in combina- 
tion with each other, and that the power of combination grows as em- 
ployments become more diversified — slavery, on the other hand, growing 
in all those countries in which men are becoming more and more limited 
to the labors of the field. Such being the case, that policy which tends 
to produce diversification and combination should be the one which would 
lead to freedom. Which of the two is it, protection or free trade, which 
tends in that direction ? For an answer to this question, we need but 
look to Northern and Central Europe — finding there the protective sys- 
tem in full vigor, and the people rapidly advancing in wealth, strength, 
freedom, and power. The opposite, or free-trade system, has been in 
active operation in India, Ireland, Turkey, and other countries, whose 
people are as rapidly declining towards poverty, slavery, and general 
demoralization. 

How, my dear sir, has it been among ourselves ? Turn to the years 
which followed the abandonment of the protective policy in 1816, and 
study the rapid growth of pauperism and wretchedness that was then ob- 
served. Pass on to those which followed the passage of the protec- 
tive tariffs of 1824 and 1828, and remark the wonderful change towards 
wealth and freedom that was at once produced. Study next the growth of 
pauperism and destitution under the compromise tariff, closing with the 
almost entire paralysis of 1840-42. Pass onward, and examine the action 
of the tariff of 1842 — remarking the constant increase in the demand 
for labor — in the production and consumption of iron, and of cotton and 
woollen goods — and in the strength and power of a community which 
had so recently been obliged to apply, and that in vain, at all the bank- 
ing houses of Europe, for the small amount of money that then was 



THEIR CAUSES AND EFFECTS. 19 

needed for carrying on the government. Look, next, to the repeated 
crises we have had under the tarifis of 1846 and 1857 — each and all of 
them tending toward strengthening the rich, while weakening the poor, 
and promoting a growth of pauperism such as has never, I believe, been 
known, in any country of the civilized world, to be accomplished in so 
brief a period. Such having been the result, the questions now arise, 
— Whither are we tending? Is it not toward slavery for the white 
laborer ? Those are the questions I have desired to have discussed, and 
whatever you, my dear sir, may think of it, they must be always in order. 

These, however, as may be said, are mere facts — a sort of political 
arithmetic. Trade should be free, and any facts that may be produced 
in opposition to that theory, must be such as cannot be relied on. — That 
we should be always going in the direction of freedom of commerce, and 
freedom of man, I fully and freely admit ; but what is the road which 
leads in that direction ? Certainly, not the one on which we recently 
have travelled — all our present tendencies being toward pauperism and 
slavery, for the white man and the black. As certainly, it is the one on 
which we travelled in the years of the period of the tariffs of 1828 and 
1842; and if you desire any evidence of this, you have but to look to 
the most distinguished free-trade writers of the present century — their 
teachings and mine being in full accordance with each other. 

Seeking proof of this assertion, allow me, my dear sir, to request 
that you will turn to Mr. J. B. Say, and study the cases described by 
him as being those in which "protection, granted with a view to promote 
the profitable application of labor and capital, may become productive 
of universal benefit." Look next, if you please, to Mons. JBlanqui, his 
successor, and find him assuring his readers that " experience had already 
taught, that a people ought never to deliver over to the chances of a 
foreign trade, the fate of its manufactures." Pass on to 3Ions. Hossi, 
and read his entire disclaimer of the idea ,of non-intervention by the 
government — ^holding, as he does, that " a prudent and enlightened ad- 
ministration requires the making, in view of probable future benefit, of 
advances that may not, possibly, be repaid in full." Turn thence to 
3fr. J. S. Mill, who tells his readers, that " the superiority of one coun- 
try over another, in any branch of production, often arises only from 
having begun it sooner, and that a country which has skill and expe- 
rience yet to acquire, may, in other respects, be better adapted to the 
production than others that were earlier in the field ; " but, that " it 
cannot be expected that individuals should, at their own risk, or, rather, 
at their certain loss, introduce a new manufacture, and bear the burthen 
of carrying it on, until the producers have been educated up to the 
level of those with whom the processes have become traditional." Look 
next to Mons. Chevalier, and learn that not only "it is not an abuse of 
power on the part of the government," but that " it is only the accom- 
plishment of a positive duty, so to act at each epoch in the progress of 
a nation, as to favor the taking possession of all the branches of industry 
whose acquisition is authorized by the nature of things." The govern- 
ment which fails to do this, "makes," as he thinks, " a great mistake." 

You have here, my dear sir, the views of five of the most eminent 
European economists of the present century — all of them high authori- 
ties in the free-trade school; and yet all concurring in the views I have 



20 FINANCIAL crises: 

expressed to you. Facts and theories being thus in opposition to your 
doctrines, is it not time that you should undertake anew the examina- 
tion of the question, with a view to satisfy yourself whether the teach- 
ings of the Post are really those of slavery or of freedom ? 

I am told that I was once a free-trader, and nothing can be more true. 
Careful study of the phenomena of the free-trade convulsion of 1840- 
42, and of the protectionist revival of 1842-47, having, however, satis- 
fied me that that the facts and the theory could not agree, I was led 
to study anew the latter, and find the cause of error. That found, 
I felt no more difiiculty in admitting that I had been wrong, than would 
be felt by yourself, after you should have tried, and vainly tried, to 
establish the fact, that the cause of freedom was to be promoted by a 
policy that separated the producer from the consumer — placing the 
spindle and the loom on one continent, and leaving the plough and the 
harrow on the other. 

At the moment of inviting you to join with me in an inquiry as to 
the real road towards wealth and freedom for our people, harmony for 
our Union, and prosperity and power for our great Confederacy — that 
inquiry to be conducted in the spirit of men who sought for truth, and 
not for victory — I had still some lingering doubts of your acceptance ; 
and yet, it appeared to me that you yourself should be quite as anxious 
for it as I, by any possibility, could be. — Desirous to remove all difficulty, 
the space to be given was left to your decision — the greatness of the 
subject seeming to me to give assurance that the inquiry would be allowed 
to assume proportions somewhat in accordance with those of the interests 
to be discussed. Pledged, as we should be, to the cause of truth, and to 
that alone, any previous involvements, on either side, would shrink into 
utter insignificance. Neither of us, as it seemed to me, need be so anxious 
to shine in the dispute as to hesitate at any risk that we, as individuals, 
might run — pledged as we were, by all our past history, to give to this one 
great question, the most frank and candid examination. 

Regretting that you have not, thus far, been able to agree with me in 
the view that has been here presented, but hoping that you may yet do 
so, I remain, with great respect, 

Yours, very truly, 

Henry C. Carey. 
W. C. Bryant, Esq. 

Philadelphia, January 24, 1859. 



(3) 



THEIR CAUSES AND EFFECTS. 21 



LETTER FIFTH. 

Dear Sir. — A fortniglit since, you stated, on tlie authority of Dr. 
Wynne, that pauperism in the State of New York had assumed propor- 
tions relatively greater than those of England or of Scotland, and '■'■ largely 
in advance" of even the downtrodden and unhappy Ireland — your per- 
centage being as high as 7.40, or more than double that of all the Bri- 
tish Islands. When these facts were first presented to your sanitary 
society, they appeared to the managers " so startling as to lead them to 
doubt their accuracy, but," as you now have told your readers, " after 
the most careful scrutiny, they have not only adopted them, but given 
them currency as authority in their report." This " condition of facts" 
is one that, as you think, " calls for investigation by the proper authori- 
ties" — the alarming facts being presented for their consideration, that 
no less than forty-one per cent of the paupers are native born, and that 
the terrible disease of pauperism appears, " like the Canadian thistle, to 
have settled on our soil, and to have germinated with such vigor as^" in 
your opinion, " to defy all half measures to eradicate it." 

The pauper is necessarily a slave to those who feed and clothe him, 
and a slave, too, more abject, as a general rule, than are even the negroes 
of the South. White slavery thus grows steadily — furnishing good 
reason for the fears that you have here expressed. Equal cause for such 
alarm may be found, however, in the fact that the growth in the number 
and power of your millionaires keeps even pace therewith — growing ine- 
quality of condition here furnishing conclusive proof of decline in civi- 
lization and in freedom. How is it that such effects are being produced ? 
Here is a great question, the solution of which may, as I think you will 
agree with me, be found in the following frightful facts, which have just 
now been given to the world, and which reveal a state of things well 
calculated to carry the alarm of which you speak, into the breast of every 
man who takes an interest in our future. 

In your city there are 560 tenement houses, containing, by actual 
enumeration, 10,933 families, or about 65 persons each; 193 with 111 
each; 71 others, with 140 each; and, finally, 29, that, as we are told, 
are the most profitable, and that have a total population of no less than 
5449 souls, or 187 to each. What are the accommodations therein pro- 
vided for the wretched occupants, is shown in the following picture : 

"One of the largest and most recently built of tlie New York 'barracks' has 
apartments for 126 families. It was built especially for this use. It stands on a 
lot 50 by 250 feet, is entered at the sides from alleys eight feet wide, and, by 
reason of the vicinity of another barrack of equal height, the rooms are so dark- 
ened that on a cloudy day it is impossible to read or sew in them without artificial 
light. It has not one room which can in any way be thoroughly ventilated. The 
vaults and sewers which are to carry off the filth of the 126 families have grated 
openings in the alleys, and doorways in the cellars, through which the noisome 
and deadly miasmata penetrate and poison the dank air of the house and the 
courts. The water-closets for the whole vast establishment are a range of stalls 



22 riNANCIAL CRISES : 

•witliout doors, and accessible not only from the building, but even from the street. 
Comfort is here out of the question ; common decency has been rendered impos- 
sible ; and the horrible brutalities of the passenger-ship are day after day repeated, 
— but on a larger scale. And yet, this is a fair specimen. And for such hideous 
and necessarily demoralizing habitations, — for two rooms, stench, indecency, and 
gloom, the poor family pays — and the rich builder receives — thirty-five ftr cent 
annually on the cost of the apartments I' " 

We have tere the type of the system that is now more and more ob- 
taining throughout the country. One financial convulsion follows an- 
other, each in its turn closing mills, mines, and furnaces, and thus 
destroying internal commerce. With every step in that direction, our 
people are more compelled to seek the cities, and thereby augmenting the 
power of the rich to demand enormous rents, usurious interest, and 
enormous prices for lots — their fortunes growing rapidly, while reducing 
thousands, and tens of thousands, to a state of pauperism and destitution. 

Is it, however, among the occupants of tenement houses, alone, that 
we are to find the facts which indicate the decline to which I have re- 
ferred — a decline which mtist be arrested, if we desire not to find the 
end of our great republic is anarchy and despotism ? Look around you, 
and you will see that while our population is growing at the rate of a 
million a-year, there is a daily diminution in the demand for skilled labor 
to be applied to the conversion of raw materials into finished commodi- 
ties — a daily diminution of that confidence in the future which is re- 
quired for producing applications of capital to the development of our 
great natural resources — a daily increase in the necessity for looking 
to trade as the only means of obtaining a support — and a consequent 
increase in the proportions borne by mere middlemen to producers, 
causing increased demand for shops, and stores, and offices, in great 
cities, and enabling landlords to demand the enormous rents which now 
are paid. The poor tenant slaves and starves, and finds himself at 
length driven to bankruptcy because his profits, after his rent is paid, 
are not enough to enable him to feed and clothe his wife and children 
— he and they being then driven to seek refuge in a " tenement house," 
there to pay a rent that enables its rich owner to double his capital in 
almost every other year. The rich are thus made richer, while pauper- 
ism and crime advance with the gigantic strides you have described. 

Is it, however, in your city alone that facts like these present them- 
selves to view ? That such is not the case, is shown in the following 
accurate sketch of the Philadelphia movement in the same direction, 
given, a few days since, by your neighbors of the Tribune : 

"Poverty has reached higher places in society than the habitually destitute. 
Want of employment with many, and reduced wages with others, all growing out 
of the warfare of the government on the industry of the country, have made the 
present season one of peculiar hardship and suffering. Honest labor goes without 
its loaf, because no one can afford to employ it. Persons formerly able to support 
themselves decently, are now crowding for relief to our benevolent institutions. 
The visitors of the latter say there is more suffering now than ever before known. 
Clothing, food, and fuel are daily given in large amounts, and yet the cry of dis- 
tress continues. The soup-houses have been compelled to reopen, and the cha- 
ritable are taxed to the utmost. These suffering thousands are the victims of the 
scandalous misgovernment which has palsied the energies of so many branches 
of industry. They would gladly earn their bread, if permitted to do so." 



THEIR CAUSES AND EFFECTS. 23 

All tins is Strictly true, and it would, as I think, be equally so if said 
of any other city of the Union — the whole presenting a picture of en- 
forced idleness such as is not, at this moment, to be paralleled in any 
country claiming to rank as civilized. Pass next, if you please, outward 
from our cities, and look to the towns and villages of your own and 
other States — marking the fact, that the power of local combination is 
steadily diminishing, and that a majority of them have either become 
stationary, or have retrograded. -. Go almost where you may, you will find 
that the internal commerce of the country is gradually declining — that 
the services of mechanics are meeting less and less demand — that the 
dependence on great cities is increasing in the same proportion that those 
cities are themselves becoming more dependent upon Liverpool and 
Manchester — and that, as a necessary consequence, pauperism and crime 
are everywhere assuming proportions so gigantic as well to warrant you 
in the assertion that their growth is now so vigorous as to bid defiance to 
''all half measures of eradication." 

How may they be eradicated ? This is a great question ; but to find 
the answer to it, we must first inquire to what it is that such a growth 
is due. Doing this, we find that the facts of the present day are in 
strict accordance with those observed in the years which followed the 
terrible free-trade crises of 1818-20 and 1837-40, as well. as with those 
observed in Ireland, India, and all other countries subject to the British 
free-trade system. Looking next to the periods which followed the pas- 
sage of the protective acts of 1828 and 1842, we find directly the reverse 
of" this — pauperism then steadily declining, and the morals of the com- 
munity improving as the societary movement became more regular. Turn- 
ing thence toward Northern and Central Europe — toward that portion 
of the Eastern world which steadily resists the exhaustive British sys- 
tem — we find phenomena corresponding precisely with those observed 
in our own protective periods — the demand for human service becoming 
more and more regular in France and Germany, and the reward of labor 
growing with a steadiness that has rarely, if ever, been exceeded. — Such 
being the facts, is it not clear, my dear sir, that it is to the readoption 
of the protective policy we must look for effectual " measures of eradi- 
cation." Believe me, nothing short of this will do. 

The readers of the Journal of Commerce have lately been assured 
" that our institutions nurture the evils in question." Were that really 
the case, the evil would be so radical in character, that nothing short of 
revolution could produce the change desired. That, happily, it is not 
so, you will, I think, be well assured, when you shall have reflected that 
all our institutions find their foundation in local development, tending 
to the creation of thriving towns and villages in the neighborhood of 
our vast deposits of coal and lead, copper, zinc, and iron — there making 
a market for the products of agriculture, and giving occasion to the 
improvement of our great water powers, to be used in the conversion 
of food and wool into cloth, and food, coal, and ore, into knives and 
axes, steam-engines and railroad bars. — What now is the object for 
whose attainment our people seek protection ? Is it not this very local- 
ization in which alone our institutions find their base ? That such is the 
case is beyond ail question, and therefore is it, that confidence in those 



24 FINANCIAL CKISES: 

institutions grows in every period of protection — pauperism and crime 
then declining in their proportions with each successive hour. 

What, on the contrary, are the tendencies of the British free-trade 
system ? Do not, under it, towns and villages decline, while great cities 
grow in size? Under it, does not internal commerce die away? Do not 
crises become more frequent and more severe ? Does not paralysis take 
the place of that healthy action whiel^ is indicative of strong and vigor- 
ous life ? Do not pauperism and immorality grow with the growth you 
have so well described ? Does not confidence in the utility and perma- 
nence of our institutions diminish with each successive year ? To all 
these questions, the answers must be in the afl&rmative — such phenomena 
having presented themselves at the close of every free-trade period, and 
the only difi"erence between the present and the past being, that the 
current one has been so much longer, and that the disease has, therefore, 
become by far more virulent. 

Looking at all these facts, is it not clear, my dear sir — 

That the cause of disease is not to be found in the character of our 
institutions ? 

That, on the contrary, it is to be found in the pursuit of a policy that 
is at war with those institutions, and threatens their destruction ? 

That the remedy of which you are in search, is to be found in the 
readoption of the policy of protection, under which the country so much 
prospered in the periods closing with 1834 and 1847 ? 

That in default of the adoption of this remedy, our institutions must 
decay and disappear ? 

That every real friend of freedom should aid in the effort to rescue 
his countrymen from the grasp of foreign traders in which they are 
now held ? 

That every movement in that direction must tend toward diminution 
in the quantity of wretchedness and crime ? And, therefore. 

That all who oppose such action — teaching British free-trade doc- 
trines — are thereby making themselves responsible, before God and 
man, for the demoralization above described ? 

Repeating, once again, my offer to place your replies to these ques- 
tions within the reach of a million and a half of protectionist readers, 
I remain, my dear sir. 

Very respectfully, your obedient servant, 

Henry C. Carey. 
W. C. Betant, Esq, 

Philadelphia, January 31, 1860. 



THEIR CAUSES AND EFFECTS, 25 



LETTER SIXTH. 

Dear Sir. — Pauperism, slavery, and crime, as you have seen, fol- 
low everywhere in the train of the British free-trade system, of which 
you have been so long the earnest advocate. On the contrary, they 
diminish everywhere, and at all periods, when, in accordance with the 
advice of the most eminent European economists, that system is effect- 
ually resisted. We, ourselves, are now in the fourteenth year of a free- 
trade period — the result exhibiting itself, as you yourself so recently 
have shown, in a growth of all that has at length most seriously 
alarmed the very men to whose unceasing efforts that growth is due. 
That they should be so is not extraordinary, but their alarm would be 
much increased were they now to study carefully the condition of affairs 
at the end of the peaceful and quiet period of protection which closed 
with 1847, and then contrast with it the state at which we have arrived 
— following up the examination by asking themselves the question — 
Whither are we tending? — and seeking to find an answer to it. The 
picture that would then present itself to view, would so much shock 
them, that they would shrink back horrified at the idea of the fearful 
amount of responsibility they, thus far, had incurred. 

That the facts are such as you have described them, cannot be denied. 
Do they, however, flow necessarily from submission to the British sys- 
tem, miscalled by its advocates the free-trade one — that one which seeks 
to limit all the nations of the world, outside of England, to the use of 
the plough and the harrow, and to a single market, that of England, for 
an outlet for their products ? That they do so, you will, I am sure, be 
ready to admit, after having reflected that men become rich, free, strong, 
and moral, in the ratio of their power to associate and combine together, 
and that the object of the British system, for more than a century past, 
has been that of preventing combination, by frustrating every attempt 
at the production of that diversification of pursuits, without which the 
power of association can have little or no existence. 

What was the system before the Revolution, and what were the mea- 
sures recommended as being those most likely to promote the retention 
of the colonists in their then existing state of dependence, are fully 
shown in an English work on the then American Colonies, of much 
ability, published in London at the time when Franklin was urging upon 
his countrymen the diversification of their pursuits, as the only road 
towards real independence, and from which the following is an extract : 

" The population, from being spread round a great extent of frontier, would 
increase wiliiout giving the least cause of jealousy to Britain; land would not only 
be plentiful, but plentiful -where our people wanted it, whereas, at present, the 
population of our colonies, especially the central ones, is confined; they have 
spread over all the space between the sea and the mountains, the consequence of 
which is, that land is becoming scarce, that which is good having all been planted. 
The people, therefore, find themselves too numerous for the agriculture, which is 
the first step to becoming manufacturers, that step which Britain has so much 
reason to dread." 



26 riNANCIAL CRISES '. 

Why, my dear sir, should Britain have so much dreaded eombination 
among her colonial subjects ? Why should she so sedulously have sought 
to disperse them over the extensive tracts of land beyond the mountains ? 
Because, the more they scattered the more dependent they could be kept, 
and the more readily they could be compelled to carry all their rude 
products to a distant market, there to sell them so cheaply, as we are 
told by another distinguished British writer, "that not one-fourth of 
the product redounded to their own profit," as a consequence of which 
plantation mortgages were most abundant, and the rate of interest charged 
upon them so very high, as generally to eat the mortgagor out of house 
and home. In a word, the system of that day, as described by those 
writers, was almost precisely that of the present hour. For its mainte- 
nance, dispersion of the population was regarded as indispensable, and 
that it might be attained, the course of action here described was re- 
commended : 

"Nothing can therefore be more politic than to provide a superabundance of 
colonies to take off all those people that find a want of land in our old settle- 
ments ; and it may not be one or two tracts of country that will answer this pur- 
pose ; provision should be made for the convenience of some, the inclination of 
others, and every measure taken to inform the people of the colonies that were 
growing too populous, that land was plentiful in other places, and granted on the 
easiest terms; and if such inducements were not found sufficient for thinning the 
country considerably, government should by all means be at the expense of trans- 
porting them. Notice should be given that sloops would be always ready at Fort 
Pitt, or as much higher on the Ohio as is navigable, for carrying all furniture 
without expense, to whatever settlement they chose, on the Ohio or Mississippi. 
Such measures, or similar ones, would carry off the surplus of population in the 
central and southern colonies, which have been and will every day be more and 
more the foundation of manufactures." 

Having studied these recommendations in regard to the maintenance 
of colonial dependence, I will ask you next to look with me into the 
working of the British free-trade system, and satisfy yourself that its 
advocates have been mere instruments of our foreign masters — closing 
our mills, furnaces, and factories, retarding the development of our 
great mineral treasures, preventing the utilization of our vast water 
powers, and in this manner driving our people to the West, in strict 
accordance with the orders of those British traders against whom our 
predecessors made the Revolution. 

In 1815, the receipts from sales of public lands amounted to $1,287,000 
This gives a measure of the then existing tendency toward dispersion. 
Five years later, when the free-trade system had paralyzed the industry 
of the country, they had risen to $3,274,000 — the customs revenue of 
the same year yielding more than $20,000,000. The government had 
seemed to be rich, and for the reason that it was " burning the candle at 
both ends " — paralyzing domestic commerce, and driving into the wil- 
derness the people to whose efforts it had been used to look for its sup- 
port. Free-trade excitement having been followed by paralysis, we find 
the customs revenue to have fallen, in 1821, to $13,000,000 — the land 
revenue at the same time gradually declining until, in 1823, it stood at 
less than a single million. As a consequence, we see the treasury to 
have been so much embarrassed as to be under the necessity of con- 
tracting loans, in the period from 1819 to 1824, to the extent of no 



THEIR CAUSES AND EFFECTS. 27 

less than $16,000,000. As usual, here and everywhere, poverty, dis- 
tress, and debt, to both the people and the government, had followed in 
the train of the teachings of the men who had desired a readoption of 
that dispersive policy recommended by British writers, as a means of 
prolonging colonial dependence. 

Turn now, if you please, my dear sir, to the picture presented by the 
protective. tariiF of 1828, and mark the steadiness of customs receipts, 
and the gejitle and quiet growth of the receipts from lands, as follows : 

Customs. Land Sales. Total. 

1829 $22,681,000 $1,517,000 $24,198,000 

1830 21,920,000 2,329,000 24,249,000 

1831 24,204,000 3,210,000 27,414,000 

1832 28,465,000 2,623,000 81,068,000 

1833 29,032,000 8,967,000 82,999,000 

In this period, every man could sell his labor, and could therefore 
purchase the products yielded to the labor of others. Every one being 
thus enabled to contribute his share to the support of the government, 
the revenue had become so large and steady that the national debt was 
then extinguished. 

Pass on now, if you please, to the time when the approaching annihi- 
lation of protection had stopped the building of mills and the opening 
of mines, and had recommenced to compel our people to scatter them- 
selves over the great West, and find the following figures : 

Customs. Land. Total. 

1835 $19,391,000 $14,757,000 $34,148,000 

1836 23,409,000 24,877,000 49,286,000 

Once again, the government was "burning the candle at both ends" 
—annihilating the power of combination, and thus diminishing the pro- 
ductive forces of the country. As before, it fancied itself rich, and acted 
accordingly — the expenditure of this period almost trebling that of Mr. 
Adams's administration, then but a few years past. As a consequence, 
bankruptcy of the people and of the banks was followed by disappear- 
ance of the power to contribute to the support of government, the cus- 
toms duties of 1841 having but little exceeded $14,000,000, and the 
land sales having fallen to $1,300,000 — giving a total of less than 
$16,000,000, not even one-third of that of 1836. Such having been 
the case, need we wonder that the poverty of the government should 
have exhibited itself in the form of irredeemable notes, and in vain 
efibrts to effect a loan in any part of Europe. Having destroyed our 
domestic commerce, and thus greatly diminished the productive power 
of the country, our foreign free-trade friends now turned their backs 
upon us — denouncing our whole people as rogues and swindlers. 

Once again, in 1842, we find the readoption of the policy of resistance 
to British domination, and once again we meet the tranquillity and peace 
of the period which found its close in 1834, as is shown in the following 
figures : - 

Customs. Land. Total. 

1843-4 , $26,183,000 $2,059,000 $28,242,000 

1844-5 27,508,000 2,077,000 29,585,000 

1845-6 26,712,000 2,694,000 29,406,000 

1846-7 23,747,000 2,498,000 26,245,000 



28 , riNANCiAL crises: 

Again, as always under protection, there was economy in the adminis- 
tration of the government. Again, the necessity for contracting loans 
had passed away. Again, too, the foreign debt of the free-trade period 
was being diminished; and why? Because, once again, that colonial 
policy which looked to the dispersion of our people had been rejected. 

Not content with the lesson that had thus been taught, the protective 
policy was again abandoned, and once again we find the colonial system 
re-established, the results exhibiting themselves in the following remark- 
able figures, indicating the extent to which the government has recently 
been repeating the experiment of " burning the candle at both ends" : 

Customs. Land Sales. Total. 

1853-4 $64,224,000 $8,470,000 $72,694,000 

1854-5 53,025,000 11,497,000 64,522,000 

1855-6 64,022,000 ......... 8,917,009 72,989,000 

As before, in every free-trade period, the government was becoming 
daily richer, while the productive power was declining from day to day. 
Expenditures, of course, increased — having reached, for those three 
years, exclusive of interest upon a large public debt, an average of 
$56,000,000, or nearly five times more than they had been thirty years 
before. 

Having thus laid the foundation for a crisis, need we wonder that that 
crisis came, leaving the government, but recently so rich, in a state of 
actual bankruptcy, and wholly unable to meet the demands upon it? 
Certainly not. It was precisely what has happened in every British free- 
trade country of the world, and in every free-trade period of our own. 
In each and every one, our people had been driven out from the older 
States, and the government had been enabled to take from them, in pay- 
ment for public lands, the mass of their little capitals, leaving them to 
borrow at three, four, or five per cent, -per month, of the wealthy capi- 
talist, all that had been required to pay for their improvements — and 
finally leaving them in the hands of the sherifi", under whose hammer 
their property had sold so cheaply as almost to forbid the purchase of 
lands that were as yet public and unimproved. The receipts from that 
source are now estimated at $2,000,000, and thus have we returned to a 
point that is really lower — our numbers being considered — than that at 
which we arrived at the close of the British free-trade speculations of 
1817-18 and 1836-39. 

Looking at all these facts, my dear sir, is it not clear — 

That the system which you advocate, and which has usurped the free- 
trade name, is but a return to that colonial one described in the passages 
above submitted for your perusal ? 

That it has for its object the destruction of the power of combination, 
and consequent diminution of the ability to produce commodities in 
which to trade ? 

That, as a necessary consequence, it tends to produce a growing de- 
pendence of both the people and the State upon foreign traders and 
foreign bankers? 

That to its present long continuance is due the fact, that British jour- 
nalists now speculate upon " the recovery of that influenc ^ which eighty 
years ago England was supposed to have lost" ? 



THEIR CAUSES AND EFFECTS, 29 

That tlie tendency toward recolonization is growing with, every hour, 
and that with each successive one, we are more and more becoming 
mere tools in the hands of British traders ? 

That, therefore, it is the duty of every friend of freedom and inde- 
pendence to lend his aid to the re-establishment of that protective sys- 
tem under which the country so much advanced in prosperity and power, 
in the periods which closed in 1816, 1834, and 1847? 

Repeating the proposition, already so often made, to have your answers 
to these questions placed before a million and a half of protectionist 
readers, I remain, my dear sir, with great respect, 

Your obedient servant, 

Henry C. Carey. 
W. C. Bryant, Esq. 

Philadelphia, February 7, I860. 



30 FINANCIAL crises; 



LETTEE SEVENTH. 

Dear Sir. — The essential object of tlie Britisli system, as you 
have ah-eady seen, is the suppression, in every country of the world, 
outside of Britain, of that diversity of human employments, without 
which there can be made no single step toward freedom. The more 
that object can be achieved, the more must other nations be compelled 
to export their products, and in their rudest shape, to Britain — doing 
so in direct opposition to the advice of Adam Smith. — This is what is 
called British free trade, the base of which is found in that annihilation 
of domestic commerce, whose effects exhibit themselves in the poverty, 
wretchedness, and crime of India, Ireland, Turkey, and other countries 
subjected to the system, all of which are so well reproduced among our- 
selves in every British free trade period. Real freedom of commerce 
consi^lf in going where you will — exporting finished commodities to 
every portion of the world. Seeking that freedom, the most eminent 
French economists, as you have already seen, have held that it was 
" only the accomplishment of a positive duty " for governments " so to 
act as to favor the taking possession of all the branches of industry whose 
acquisition is favored by the nature of things," and that when they failed 
to do so, they made " a great mistake." 

In full accordance with the idea thus expressed, the French Govern- 
ment has adhered to the policy of protection with a steadiness without 
example — the great result exhibiting itself in an export of the products 
of agriculture, in a finished form, such as can nowhere else be found. 
Thus protecting domestic commerce, the government finds itself repaid 
in the power to obtain revenue from a foreign commerce that has quad- 
rupled in the short space of thirty years — the $100,000,000 of 1830 
having been replaced by the almost $400,000,000 of each of the last 
three years — the population meantime having remained almost station- 
ary. As a consequence of this the reward of labor has much increased, 
the people have become more free, and the State has grown in influence 
with a rapidity unknown elsewhere. 

That it is to industrial development we are to look for the creation of 
a real agriculture, can now be no longer doubted — the Emperor having, 
in his recent letter, told his finance minister, that '^ without a prosperous 
industry agriculture itself remains in its infancy;" that "it is necessary 
to liberate industry from all internal impediments," and thereby " im- 
prove our agriculture;" and that in so doing the government will be 
" creating a national wealth " and diffusing " comforts among the working- 
classes." 

Nothing more accurate than this could have been said by the great 
Colbert himself — the man to whose labors France was first indebted for 
the relief of her domestic commerce from the pressure of internal restric- 
tions and external warfare. Compare it, however, I pray you, with our 
pohcy, erroneously styled the free trade one, every portion of which 



THEIR CAUSES AND EFEECTS. 31 

seems to have had for its object the creation of impediments to domestic 
commerce, and the subjugation of our farmers to the tyranny of foreign 
traders. Look, if you please, to the almost endless series of laws having 
for their object the compulsory use of gold and silver, in a country which 
exports the precious metals to such extent as to have driven our people, 
throughout a large extent of country, to the payment of three, four, and 
five per cent per month, for the use of the small amount of money 
which, even at such rates, can be obtained. Turn next to the postage 
law proposed by your Southern free trade friends, at the last session, by 
means of which the charge for the transmission of letters was to be 
almost doubled. Study then the constant succession of free trade crises, 
by means of which our domestic commerce has been so often paralyzed. 
Pass on, and find the closing of furnaces and mills, followed by constant 
increase of difficulty in the sale of labor — constantly growing pauperism 
and crime — and as constant increase of that dependence upon foreign 
markets which has, in every other country, been attended by growth of 
slavery among men, whether black, brown, or white. Look where you 
may, you will find the system of which you have been the steady advo- 
cate, leading to the adoption of measures directly opposed to the teach- 
ings of Adam Smith and those of his most distinguished successors, 
here endorsed by Louis Napoleon. 

Turn next to another passage of the imperial letter, and find in it 
that agriculture must have '■'■ its share in the benefits of the institutions 
of credit,^' and that the government must " devote annually a considerable 
sum to works of drainage, irrigation, and clearage." , Having read this, 
study, if you please, the proceedings of your free trade friends, constantly 
engaged as they have been, in the eff'ort to destroy the credit of banks, 
and to prevent the substitution of paper for gold — and thus so far de- 
stroying confidence, that tens of millions of specie are now hoarded in 
private vaults by men who dare not spend it, and fear to lend it at any 
interest whatsoever. — Turn, thence, to the condition of our treasury, and 
contrast it with that of France — the latter proposing to lend money to 
the people at low interest, while the former is constantly in the market 
as a borrower, and at higher rates of interest than are paid by any govern- 
ment that claims to rank as civilized. 

Pass next to manufactures, and find the Emperor telling his minister 
that, " to encourage industrial production, he must liberate from every 
tax all raw material indispensable to industry," and that he must '■'■ allow 
it, exceptionally, and at a moderate rate, as has already been done for 
agriculture, the funds necessary to perfect its raw material " — meaning 
thereby, as I understand it, further grants of aid similar to those which 
have resulted in improving the breed of sheep, and in giving to French 
agriculture many products not native to the soil, and yet essential to 
the perfection of manufactures. — Having studied this, allow me next to 
request that you will examine the teachings of the author of the tariff 
of 1846 — the tariff you have so steadily admired — and find him protest- 
ing against the imposition of " higher duties upon the manufactured 
fabric than upon the agricultural product out of which it is made." 
.Examine, then, his tariff, and find in it a systematic effort at the dis- 
couragement of industrial production by the imposition of heavy duties 
on the raw material of manufactures — sometimes so great, even, as to 



82 FINANCIAL crises: 

exceed those paid by the finished commodities for the production of 
which they were needed to be used. That done, look next at the re- 
peated eiForts of private individuals to improve our breed of sheep, and 
at the ruin that has been the consequence — that ruin having resulted 
necessax'ily from changes of policy that have closed our factories and 
sent merinos to the slaughter-house. Look in what direction you may, 
you will find that, with the exception of the brief and brilliant period 
of the tariff of 1842, the men engaged in the development of our great 
mineral treasures, and those engaged in introducing, extending, and per- 
fecting works of conversion, and thereby giving the farmer a market 
for his products, have been regarded as enemies, deserving only of the 
hatred of the government; as men for the accomplishment of whose 
ruin fraud and falsehood might justly be resorted to — the holiness of 
the end sanctifying the employment of any means that might be used. 

Adopting these ideas, the Emperor assures his minister that he will 
find in them the road toward real freedom of trade — the great exten- 
sion of commerce producing a necessity for " successive reductions of the 
duty on articles of great consumption, as also the substitution of pro- 
tecting duties for the prohibitive system which limits our commercial 
relations." — Having read this, do me the favor to turn to the period of 
the protective tariff of 1828, and find there precisely the state of things 
here described — the great increase of revenue having then produced a 
necessity for abolishing the duties that had always thus far been paid 
by tea and coffee. Look, next, to the working of that dispersive system, 
which scatters our population over the continent, and destroys the power 
of combination — at one moment filling the treasury to repletion by 
means of custom-house receipts and sales of public lands, and then 
leaving it bankrupt, to seek, as was done in 1842, and is now being 
done, for loans abroad, to keep the wheels of government in motion until 
the tariff can be raised. 

The policy of the French Government was accurately defined, some 
three or four years since, by the President of the Council, and there is 
nothing in the Emperor's letter that is not in strict accordance with the 
determination then expressed, as follows : 

" The Government formally rejects the principle of free trade, as incompatible 
■with the independence and security of a great nation, and as destructive of her 
noblest manufactures. No doubt, our customs-tariifs contain useless and anti- 
quated i^rohibitions, and -we think they must be removed. Protection, hovrever, 
is necessary to our manufactures. This protection must not be blind, unchange- 
able, or excessive ; but the principle of it must be firmly maintained." 

We are told, however, that a treaty has been signed, in which there 
are great advances toward freedom of trade. If so, it does but prove 
the perfect accuracy of M. Chevalier, who is said to have been the 
French negociator, in regarding protection of the domestic commerce as ' 
the real and certain mode of reaching freedom of intercourse with foreign 
nations. " In every country," as he has told his readers, '' there arises 
a necessity for acclimating among its people the principal branches of 
industry" — agriculture alone becoming insufiicient. ''Every commu- 
nity, considerable in numbers, and occupying an extensive territory," 
is therefore, as he thinks, " well inspired, when seeing to the establish- 



THEIR CAUSES AND EFFECTS; 33 

ment, among its members, of diversity in tlie modes of employment. 
From the moment that it approaches maturity, it should seek to prepare 
itself therefor, and when it fails to do so, it makes a great mistake.'' 
This " combination of varied effort," as he continues, " is not only pro- 
motive of general prosperity, but it is the condition of national progress." 
Elsewhere, he says, that " governments are, in effect, the personification 
of nations, and it is required that they should exercise their influence in 
the direction indicated by the general interest, properly studied and 
carefully appreciated." Therefore does he "regard as excellent, the 
desire of some of the most eminent men of the principal nations of 
Europe to establish around them the various branches of manufactures." 

Such being the latest views of the present leading free-trade writer 
of France, we may, I think, feel quite assured that what he may now 
have done, is only what he has regarded as warranted by the advanced 
position occupied by French manufactures — that position having been 
attained by means of a steady pursuit of the protective policy. It is 
the point at which we have ourselves arrived in reference to every 
branch of manufacture that has found itself efficiently protected in the 
domestic market, whether by the particular circumstances of the case, 
or by aid of revenue laws. More steadily than to any other, was protec- 
tion given to the production of coarse cottons, and hence it is, that we 
now export them. The newspaper is protected by locality, and that 
protection is absolute and complete ; and hence it is, that we have now 
the cheapest journals in the world. The piano manufacture is protected 
by climate; and therefore it is, that it has attained a development ex- 
ceeding that of any other country. Had iron been as well protected, 
our annual product would count by millions of tons, and we should be 
now exporting, in the forms of iron, and manufactures of iron, a quan- 
tity of food twice greater than that we send to Europe. All our expe- 
rience shows, that the more perfect the security of the manufacturer in 
the domestic market, the greater is the tendency to that increase of 
competition needed for enabling us soon to commence the work of sup- 
plying the exterior world. 

In your notice of the changes now proposed in the French commercial 
system, you speak in terms of high approval of Mons. Chevalier, as a 
"■ zealous adversary of commercial restrictions," but have you ever, my 
dear sir, taught the doctrines of the teacher of whom you now so much 
approve ? Have you ever told your readers, — 

That "every community is well-inspired when seeing to the establish- 
ment among its members, of diversity in the modes of employment"? 

That " combination of varied effort is the condition of national pro- 
gress " ? 

That " every nation, therefore, owes it to itself to seek the establish- 
ment of diversification in the pursuits of its people, as Germany and 
England have already done in regard to cottons and woollens, and as 
France has done in reference to so many, and so widely-different kinds 
of manufacturing industry"? 

That " governments are in effect the personification of nations, and 
should exercise their influence in the direction of the general interest, 
properly studied and fully appreciated " ? And, therefore 

That " it is only the accomplishment of a positive duty so to act, at 
3 



d4 FINANCIAL CRISES: 

each epocli in the progress of a nation, as to favor the taking possession 
of all the branches of industry whose acquisition is authorized by the 
nature of things " ? 

Unhappily, such have not been the teachings of the Post. Had they 
been such — bad your journal sustained the policy advocated by Mons. 
Chevalier, as here established at the date of the fearful financial crisis 
of 1842, should we not, even at this time, have been far advanced toward 
that position in which we could feel that protection would cease to be 
required ? Unfortunately, it has taught the reverse of this — the results 
exhibiting themselves in a constant succession of financial crises, and 
paralyses of the most fearful kind — in repeated bankruptcies of the 
treasury, of banks, railroad companies, and merchants — in an almost 
entire destruction of confidence — in the subjugation of the poor bor- 
rower to the rich money-lender, to an extent unparalleled in any civi- 
lized country of the world — and in a growth of pauperism, slavery, and 
crime, that must be arrested if we would not see a perfection of anarchy 
established as being the condition of our national existence. 

Had you and others taught the doctrines of M. Chevalier, would such 
be now the state of ^hings in a country so richly endowed by nature as 
our own ? 

Not having taught them, and such having been the results of your 
past teachings, is it not now your duty, as a man, as a lover of liberty, 
and as a Christian, to study anew the doctrines of the economist you 
have so much commended, and satisfy yourself that you have been 
steadily advocating the extension of slavery while desiring to be the 
advocate of freedom ? 

Hoping that you may conclude to furnish answers to these questions, 
and reiterating the assurance that they shall have the largest circulation 
among tile advocates of protection, I remain, my dear sir, 

Yours, very truly, 

Henry C. Carey. 
W. C. Betant, Esq. 

Philadelphia, February 14, 1860. 



THEIR CAUSES AND EFFECTS. 35 



LETTER EIGPITH. 

Dear Sir. — For the maintenance of colonial dependence, and for 
the perpetuation of power to compel the colonists to make their exchanges 
in a foreign market from which they were allowed to carry away but one- 
fourth of the real value of their products, it was, as you have already 
seen, held that they should be led to disperse themselves throughout the 
West — thereby almost annihilating that power of association which, as 
then was feared, might lead to such increase of wealth and strength as 
would forward the cause of independence. For the accomplishment of 
that great object, the aid of government was then invoked — its help 
being needed for providing lands and means of transportation. Since 
then, the British free trade system has been employed to do the work, 
its mode of action being that one so well described in a Parliamentary 
document now but a few years old, the following extract from which is 
here submitted for your perusal : 

" The laboring classes generally, in the manufacturing districts of this country, 
and especially in the iron and coal districts, are very little aware of the extent to 
which they are often indebted for their being employed at all to the immense 
losses which their employers voluntarily incur in bad times, in order to destroy 
foreign competition, and to gain and keep possession of foreign markets. Authentic 
instances are well known of employers having in such times carried on their works 
at a loss amounting in the aggregate to three or four hundred thousand pounds in 
the course of three or four years. If the efforts of those who encourage the com- 
binations to restrict the amount of labor and to produce strikes were to be suc- 
cessful for any length of time, the great accumulations of capital could no longer 
be made which enable a few of the most xoealthy capitalists to overwhelm all foreign 
competition in times of great depression, and thus to clear the way for the whole trade 
to step in when prices revive, and to carry on a great business before foreign 
capital can again accumulate to such an extent as to be able to establish a com- 
petition in prices with any chance of success. The large capitals of this country 
are the great instruments of warfare against the competing capital of foreign countries, 
and are the most essential instruments now remaining by which our manufacturing 
supremacy can be maintained ; the other elements — cheap labor, abundance of 
raw materials, means of communication, and skilled labor — being rapidly in pro- 
cess of being equalized." 

The system here so admirably described, is very properly characterized 
as being a " warfare '" and it may now be proper to inquire- for what 
purposes, and against whom, it is waged. It is a war, as you see, my 
dear sir, for cheapening all the commodities we have to sell, labor and 
Taw materials — being precisely the object sought to be accomplished by 
that "Mercantile System," whose error was so well exposed in the 
Wealth of Nations. It is a war for compelling the people of all other lands 
to confine themselves to agriculture — for preventing the diversification 
of employments in other countries — for retarding the development of 
intellect — for palsying every movement, elsewhere, looking to the utili- 
zation of the metallic treasures of the earth — for increasing the difl&culty 
of obtaining iron — for diminishing the demand for labor — for doins: all 



36 FINANCIAL crises: 

these things at home and abroad — and for, in this manner, subjecting 
all the farmers and planters of the world to the domination of the 
manufacturers of Britain. 

How our government co-operates in this warfare upon its people, and 
in the promotion of the great work of reeolonization, will readily, my 
dear sir, be understood by all who shall study the British prescription 
given in a former letter, and shall then compare it with the course of 
action here, under your advice, so steadily pursued — expending, as we 
have done, and now are seeking to do, enormous sums, and even carrying 
on distant wars, for the acquisition of further territory — making large 
grants of land for facilitating the construction of roads and the disper- 
sion of our people — forcing millions of acres upon the market, and then 
rejoicing over the receipts, as if they furnished evidence of increasing 
strength, and not of growing weakness — wasting the proceeds in politi- 
cal jobs of the most disgraceful kind, and in this manner producing 
financial crises that close our mines, furnaces, and mills, and drive our 
people to seek a refuge in the wilderness, there to pay the speculator 
treble price for land — and thus enabling him to demand three, four, 
or five per cent |je?' month, for the use of some small amount of 
capital to aid in clearing the land thus purchased, and in erecting the 
little dwelling. — The house built, and the farm commenced, next comes 
the sherifi", and by his aid the poor colonist is now driven to seek a new 
refuge in some yet more distant territory — in full accordance with the 
desires of those of our free trade friends abroad, who see in every 
attempt at combination a step toward manufactures — " that step which 
Britain has so much cause to dread." 

That such are the facts presented by our records cannot be denied. 
Having studied them with the attention they demand, you will, my dear 
sir, be in a position to answer to yourself, even if not to me, the question 

— Does the history of the world, in any of its pages, exhibit evidence 
of the existence elsewhere of so powerful a combination for the pro- 
motion of that pauperism and crime, whose extraordinary growth you 
have so well described ? So far as my knowledge of history extends, it 
warrants me in saying, that no such evidence can be presented. 

The poor colonist, thus driven out, suffers under a tax for transporta- 
tion that, if continued, must for ever keep him poor. His need for 
better roads is great, but of power to assist himself he has none what- 
ever. His distant masters may, perhaps, be induced to grant him help 

— knowing, as they do, that each new road will act as a feeder of their 
coffers, while aiding in the destruction of the powers of the soil, in the 
further scattering of their subjects, and in more firmly establishing their 
own security against the adoption of any measures tending to the pro- 
motion of industrial independence. Lands are now mortgaged, and at 
enormous rates of interest, as the only mode of obtaining the means 
with which to commence the road. The work half made, it becomes next 
needful to raise the means with which to finish it, and bonds are now 
created, bearing six, eight, or ten per cent interest, to be given at 
enormous discounts, in exchange for iron so poor in quality that it 
would find a market nowhere else — its wear and tear being such as 
must prove destructive to its unhappy purchaser. Under such circum- 
stances the road fails to pay, and it passes into the hands of mortgagees, 



THEIR CAUSES AND EEEECTS. 37 

leaving those by whom the work was started, poorer than before — their 
lands being heavily mortgaged, and they themselves being at last driven 
out of house and home. Such is the history of most of the persons who 
have contributed toward the commencements of the road and canal 
improvements of which we so much boast, and such the history of 
the roads themselves — each and every financial crisis causing further 
absorption of American railroad property by English bondholders, as 
has been already done in reference to the Reading, Erie, and so many 
other roads. 

3Iust this continue to be so ? It must, and for the reason, that our 
whole policy tends toward the annihilation of local action and domestic 
commerce — that commerce in the absence of which railroads can never 
be made to pay interest on the debts to the contraction of which their 
owners have been driven. The greater their dependence upon distant 
trade, the more imperative becomes, from day to day, the necessity for 
fighting for it — for adopting measures tending to the further destruc- 
tion of local trafiic — and for thus rendering more and more certain the 
ultimate ruin of nearly every railroad company of the Union. How is 
it with yourselves — with the people of your State ? But a short time 
since, we were assured that a barrel of flour could be transported to your 
city from Rochester at less cost than from Utica — from Buffalo more 
cheaply than from Rochester — from Cleveland for less than from 
Buifalo — and from Chicago more cheaply than from Cleveland — your 
railroad companies thus offering large bounties on the abandonment of 
the soil of the State, and thereby aiding our foreign masters in the ac- 
complishment of the dispersion of our people. So is it in this State of 
Pennsylvania — through freight being carried at less than cost, while 
domestic commerce is taxed for the payment of losses, interest, salaries, 
and dividends. — In all this there is a tyranny of trade that has at length 
become so entirely insupportable, that the farmers of the older States 
are now clamorous for measures of relief— urging upon their re- 
spective legislatures the adoption of laws in virtue of which they shall 
be relieved from a tax of transportation that is destroying the value of 
their land and labor, and that must result in the crippling of all the 
Atlantic States, as well as of some of the older of their Western 
neighbors. 

To such demand on the part of your farmers, you, however, reply, 
that it would be "legislation against trade" — that ''nothing could be 
more impolitic than this process" — that 

"The citizens of Baltimore and Philadelphia, if they should think it decoi^ous 
and politic to do such a thing, might well pass a public vote of thanks to the 
legislature which would enact such a law. The moment it is passed, all the through 
trade, all the vast accumulations of the produce of the West which now find their 
way to New York by the New York Central Railroad, will desert it. When the 
Governor of New York signs the bill preventing free competition between our 
Central Railroad and its more southern rivals, he signs a bill for the relief of 
Philadelphia and the aggrandizement of Baltimore, and there will be great 

rejoicing in those cities, whether it bS publicly expressed or not The 

people of Maryland and Pennsylvania make no laws to prevent the competition 
of their railways with ours. They are satisfied to let those who manage them 
draw off as great a proportion of the freight from our channels of transportation 
as they are able, and they will be very glad of our co-operation in this work. 



38 FINANCIAL CKISES: 

Baltimore has invested sixty millions of dollars in the railways which centre in 
that flourishing city. Whether these are profitably managed or not, is not so 
much the question with those who contribute the mpney, as whether the effect 
shall be to build up Baltimore as a great mart, and make Maryland the thorough- 
fare of an active trade. Baltimore is the commercial gate of the South ; her 
ambition is to become that of the West also. No measure could be better calcu- 
lated to conspire with this ambition, and further this intent, than the fro rata 
freight bill now before our legislature. We earnestly hope that those members 
who have been induced to favor it will give the subject a more careful considera- 
tion, and spare us from an enactment the error of which will be but too deplorably 
evident before another legislature can assemble." 

In all this, I find no single word in favor of the farmers and land- 
holders of your State — those people upon whom you so long have 
urged consideration of the advantage that must result to them from 
destroying internal commerce and readopting the colonial system against 
which our predecessors made the Revolution. Had you now occasion to 
talk to ^/lem, you would probably say — "Gentlemen farmers, you are 
entirely in error in supposing that you have any interests that require 
to be considered. The more you can be forced to become dependent 
upon Britain, the more rapid will be the growth of cities like our own. 
That the dependence may be increased it is needed that we close the 
mills, mines, and furnaces of the Union ; that we render the laborer 
more and more dependent upon the capitalist ; that financial crises con- 
tinue to increase in number and intensity; that the rate of interest be 
maintained so high as to ruin farmers, manufacturers, and railroad com- 
panies, while increasing the number of millionaires ; that pauperism and 
crime continue to increase, with constant diminution in the power to 
purchase the products of the farm ; that the productiveness of your land 
continue to diminish as it now is doing ; that our people be dispersed 3 
and" that railroads continue to co-operate with the government in the 
efi"ort to destroy that power of association to which, alone, should we 
look, did we desire to witness your growth in strength, wealth, and power. 
The heavier your taxation, the higher will be the prices of our city lots." 
That the British free trade system is one of universal discord is proved 
by the commerce of India, Ireland, Turkey, and all other countries 
subject to it, and by our own, in every period of its existence. That 
opposition to it is productive of harmony, force, and strength, is shown 
in the movements of Germany, France, and every other country that 
looks to the development of internal commerce as furnishing the real 
base of an extended intercourse with other nations. Turn, if you please, 
to the recent letter of the French Emperor^ and find him telling his 
finance minister that — 

" One of the greatest services to be rendered to the country is to facilitate the 
transport of articles of first necessity to agriculture and industry. With this 
object, the Minister of Public Works will cause to be executed as promptly as 
possible the means of communication, canals, roads, and railways, whose main 
object will be to convey coal and manure to the districts where the wants of pro- 
duction require them, and will endeavor to reduce the tariffs by establishing an 
equitable competition between the canals and railways." 

Compare with this the teachings of the Post, and you will find the 
latter saying directly the reverse — exhibiting the advantage of sending 
to England all our products in their rudest forms, thus losing the 



THEIR CAUSES AND EFFECTS. 39 

manure, and driving our people to the West, there to find a constant 
increase in the necessity for roads, accompanied by as constant decrease 
in the power to make them. — That done, allow me to ask yotir attention 
to the steady growth of harmony in the interests of railroad owners, 
farmers, and manufacturers, exhibited in the following figures repre- 
senting the receipts of French railroads in recent years : 

Total Receipts. Receipts per Kilometer. 

Francs. Francs. 

1857 311,608,012 45,259 

1858 335,239,015 41,398 

The year following the great financial crisis exhibits, thus, a larger 

receipt than that by which it had been proceeded Look now to the 

receipts of the first half of the two past years, as follows, and mark the 
great increase that has since been made — 

Total Receipts. Receipts per Kilometer. 

Francs. Francs. 

1858 148,955,578 19,305 

1859 181,095,064 20,699 

Compare, I pray you, my dear sir, the movement thus indicated with 
that exhibited among ourselves in .the past three years, and you will 
have little difl&culty in comprehending why it is, that our railroad com- 
panies, like our farmers and manufacturers, our miners and our ship- 
owners, are now being ruined — the $1200,000,000 expended in their 
construction having at this moment a market value that can scarcely ex- 
ceed, even if it equal, $400,000,000. 

Looking at all these facts, is it not certain, my dear sir, — 

That the free trade system of which you are the advocate is one of 
universal discord ? 

That it tends to the involvement of men of all pursuits in life, and 
of the Union itself, in one great and universal ruin ? And, therefore, 

That it is to the interest of the railroad proprietor to unite with the 
farmer in promoting the adoption of measures having for their object 
the development of our mineral wealth, the creation of a real agricul- 
ture, and the extension of domestic commerce ? 

Hoping for replies to these questions, and ready to give them cir- 
culation among millions of protectionist readers, I remain, with much 
respect, Yours, very truly, 

Henry C. Carey. 
W. C. Bryant, Esq. 

Philadelphia, February 20, 1860. 



40 FINANCIAL crises: 



LETTER NINTH. 

From the Evening Post, Tuesday, February 21st. 

"AnAttejipt to Eeviye an Old Abtjse. — It is intimated, we know not on 
•what authority, that the Committee of Ways and Means are about to report a bill 
to the House of Kepresentatives, with the view of carrying into efifect Mr. Bucha- 
nan's recommendation to return to the old system of specific duties. 

" If this be so, our aged President, who has been worrying about specific duties 
ever since he took the Executive chair, will undoubtedly enjoy a slight sense of 
relief. For our part, we should be perfectly willing to see him gratified in this 
respect, if the measure suggested did not imply an impeachment of the good sense 
of the committee by whom the bill is said to be preparing, and if the return to 
specific duties were not simply a device to increase the burdens of the people. 
The mill-owners are not satisfied with their profits; they do not make money 
enough by selling their merchandize, and they call for specific duties to enable 
them to extract a more liberal revenue from those with whom they deal. 

" This is the plain English of the clamor for specific duties. The consumers do 
not want them, do not ask for them, are satisfied with the present method of col- 
lecting the duties by a percentage on the value of the goods imported ; the only 
change they wish for is that the duties should be made lighter. Only the frater- 
nity of mill-owners, shareholders in manufacturing corporations, capitalists who 
are anxious, as all capitalists naturally are, to make what they possess more pro- 
ductive than it now is, ask for the imposition of specific duties. They have not 
the face to ask for a direct increase of the duties as they now stand ; they are 
afraid to demand that a tax of fifteen per cent on imported merchandize shall be 
raised to twenty per cent, or a duty of twenty to one of twenty-five or thirty. 
The country would cry shame on any such change. They, therefore, get at the 
same thing indirectly; they wrap up the increase of taxation in the disguise of 
specific duties ; the consumer is made to pay more, but being made to pay it 
under the name of specific duties, the increase is of such a nature that it will be 
apparent only to an expert mercantile calculator. The consumer finds that the 
commodity he needs bears a higher price, but he is mystified by the system of 
specific duties, and does not know that the increase of price is a tribute which he 
is forced to pay to the mill-owners. 

" That class of men who own our manufacturing establishments have had pos- 
session of the legislative power of the country long enough. It is quite time that 
the committees of Congress, and those who vote on the schemes laid before them 
by those committees, should begin to consult the wishes of the people. It is high 
time that they should begin to ask, not what will satisfy the owners of forges, 
and foundries, and coal-mines, and cotton-mills, and woollen-mills, but what is 
just and fair to those who use the iron, and warm their habitations with the coal, 
and wear the woollens and the cottons. This is not done ; the lords of the mills 
speak through the mouth of the President of the Republic and call for specific 
duties, and now we are told that they are dictating a bill to the Committee of 
Ways and Means. 

" Great apprehensions have been entertained by many persons, both here and 
abroad, lest minorities should be oppressed in our country by unjust laws passed 
in obedience to the demand of the mass of the people. We received, not long 
since, a letter from England, in which great anxiety was expressed lest this should 
lead to the downfall of our government. Hitherto, however, the people in this 
country have been oppressed by powerful and compact minorities. Laying aside 
the fact that small classes of men, united by a very perfect mutual understanding, 
and wielding large capitals, too often domineer in our State legislatures, it is 



THEIR, CAUSES AND EFEECTS. 41 

certain that the revenue laws of this country have, for many years past, been 
framed by a minority. The mill-owners have dictated the whole system of indi- 
rect taxation, ever since the last war with Great Britain, and the utmost we have 
been able to obtain in the struggle against their supremacy has been some miti- 
gation, some relaxation of the protective system — never a complete release from 
it. The oligarchy of slaveholders, scarcely more numerous than that of the mill- 
owners, and -equally bound together by a common interest and concerted plans 
of action, have held the principal public offices, interpreted the laws, and swayed 
the domestic policy of the country with a more and more rigorous control for 
many years past. We are engaged in a struggle with that oligarchy now ; but we 
have no idea of allowing the other oligarchy of mill-owners, while we are thus 
engaged, to step in and raise the tribute-money we pay them to the old rates. 
What we have wrested from their tenacious grasp we shall keep, if possible. 

"Other governments are breaking the fetters which have restrained their 
peaceful intercourse with each other, and adopting a more enlightened system — 
a system which is the best and surest pledge of enduring amity and peace between 
nations. England and France are engaged in putting an end to the illiberal and 
mutually mischievous prohibitive system in their commerce with each other. It 
will dishonor us in the eyes of the civilized world if we, who boast of the freedom 
of our institutions and the wisdom of our legislation, should in the meantime be 
seen picking up the broken fetters of that system, and putting them into the 
hands of artisans at Washington to forge them again into handcuffs for our wrists. 
If any such bill as is threatened should be introduced into Congress by the Com- 
mittee of Ways and Means, we trust that the Republicans of the Western States 
will be ready to assist in giving it its death-blow. If it do not meet its quietus 
from them, it will probably be rejected, as it will richly deserve, in the Senate, 
and Mr. Buchanan will never have the satisfaction of giving it his signature." 



Dear Sir :' — You have been invited to lay before your readers tbe 
arguments in favor of sucb. a change in our commercial policy as should 
tend to produce diversification in the demand for human service, 
thereby increasing the power of association and the productiveness of 
labor, while relieving our farmers from a tax of transportation ten times 
more oppressive than all the taxes required for the support of European 
fleets and armies — that invitation having been given in the hope that 
by its acceptance you would make manifest your willingness to permit 
your readers to see both sides — your entire confidence in the accuracy 
of the economical doctrines of which you have been so long the earnest 
advocate — and your disposition to espouse the cause of truth, on what- 
soever side she might be found. That you should have failed to do this 
has been to me a cause of much regret, having hoped better things of 
a lover of freedom like yourself. Resolved, however, that my readers 
shall have full opportunity to judge for themselves, I now, as you see, 
place within the reach of the great mass of the protectionists of the 
Union, the reply that you have just now published, sincerely hoping 
that they may give to it the most careful study, and thus enable them- 
selves to form a correct estimate of the sort of arguments usually adduced 
in support of that British free trade policy which has for its object the 
limitation of our farmers to a single and distant market for their products 
— the maintenance of the existing terrific tax of transportation — and 
the ultimate reduction of our whole people to that state of colonial 
. dependence from which we were rescued by the men who made the 
revolution. 

As presented by me, the question we are discussing is not of the 
prices of cotton goods, but of human freedom, and in that light it 



42 FINANCIAL CRISES : 

is that I tave begged you should consider it. In support of ttat 
view, I have urged upon your consideration the facts, that every British 
free trade period has closed with one of those fearful crises whose 
sad effects you have so well depicted; that crises have been followed 
by paralyses of the domestic commerce, destroying the demand for 
labor; and that, as a necessary consequence, each such period has been 
marked, on one side, by a great increase in the number of millionaires, 
and on the other, by such a growth of pauperism that that terrible dis- 
ease appears now, to use your own words, " like the Canadian thistle, to 
have settled on our soil, and to have germinated with such vigor, as to 
defy all half measures to eradicate it." Further, you have been asked 
to look to the facts, that the reverse of all this has been experienced in 
every period of the protective system — domestic commerce having then 
grown rapidly, with constant increase in the demand for labor, and as 
constant augmentation in the regularity of the societary action, in the 
freedom and happiness of our people, in the strength of the government, 
and in the confidence of the world, both at home and abroad, in the 
stability of our institutions. Such is the view that has been presented 
to you, in the hope and belief that to a lover of freedom like yourself 
it would be one of the highest interest, and that it would be met and 
considered in a manner worthy of a statesman and a Christian. Has it 
been so considered ? To an examination of that question I shall now 
ask your attention, reserving for a future letter the consideration of the 
effects of the advalorem system in producing those financial crises whose 
terrible effects you have so well depicted, and that pauperism and crime 
whose growth you have so much deplored. 

The experience of the outer world is in full accordance with our own, 
the whole proving that the tendency toward harmony, peace, and freedom, 
exists in the direct ratio of the diversity in the demand for human force, 
and consequent power of combination among the men of whom society 
is composed. Therefore is it, that the most distinguished economists are 
found uniting in the idea expressed by M. Chevalier, the free trader 
whom you so much admire, that it is only " the accomplishment of a 
positive duty" on the part of governme.its, so to direct their measures 
as to facilitate the taking possession of all the various branches of indus- 
try for which the country has been by nature suited. Such must be the 
view of every real statesman — recognizing, as such men must, the 
existence of a perfect harmony in the great and permanent interests of 
all the various portions of society, laborers and capitalists, producers 
and consumers, farmers and manufacturers. Of such harmony, however, 
you give your readers none — consumers of cloth and iron here being told 
that capitalists " not satisfied with their profits" are anxious to " increase 
the burdens of the people ;" that " the fraternity of mill-owners," and 
they alone, are anxious for a change of system, with increase of taxes ; 
that '^ the lords of the mills" are dictating to the Committee of "Ways and 
Means ; that " mill-owners have dictated the whole system of indirect 
taxation ;" and that it is high time for them now to protest against the 
further maintenance or extension of the system. Here, as everywhere, 
you are found in alliance with that British free trade system which 
seeks the production of discord, and discord and slavery march always 
hand in hand together throuo-h the world. 



THEIR CAUSES AND EFFECTS. 43 

Allow me now, my dear sir, to ask you if you really believe that tte 
facts are sucli as they here are said to be ? Do you not, as well as 
myself, hiowy that for years past, the wealthy mill owners of New 
England have been opposed to any change of system that could, by 
giving increased protection, tend to augment domestic competition for 
the sale of cloth, knowing, as they did, that such competition must de- 
crease the cost of cloth to the consumer. So is it now, with the wealthy 
iron master. He can live, though all around him may be crushed by 
British competition 5 and then, in common with his wealthy British 
rivals, he must profit by the destruction they have made. Such being 
the facts, and that they are so I can positively assert, are you not, by 
opposing protective measures, aiding in the creation among ourselves of 
a little " oligarchy of mill owners," whose power to increase the "tribute 
money" of which you so much complain, results directly from the failui-e 
of Congress so to act as to increase domestic competition for the sale 
of cloth and iron ? The less that competition, the less must be the re- 
ward of labor, and the larger the profits of the capitalist, but the greater 
must be the tendency towards pauperism and crime-, and the less the 
power to consume either cloth or iron. 

" Hitherto," as you here tell your readers, our people " have been 
oppressed by powerful and compact minorities." In this you are right 
— a small minority of voters in the Southern States having dictated the 
repeal of the protective tariifs of 1828 and 1842, and having now, with 
a single and brief exception, dictated for thirty years both the foreign 
and domestic policy of this country. In 1840, however, the free people 
of our Northern States, farmers, mechanics, laborers, and miners — the 
men who had labor to sell and knew that it commanded better prices 
in protective than in free trade times — rose in their might and hurled 
from power this little " oligarchy" of slave owners, then taking for them- 
selves the protection which they felt they so greatly needed. That it 
is, which they now seek again to do — desiring once again to free them- 
selves from the control of that " powerful and compact minority" of 
slaveholders, under whose iron rule they so long have suffered. 

Permit me now, my dear sir, to ask on what side it was you stood, in 
the great contest of 1842 ? Was it with the poor farmer of the North 
who sought emancipation from the tax of transportation, by the creation 
of a domestic market for his products ? Was it with the mechanic who 
sought the re-opening of the shop in which he so long had wrought r* 
Was it with the laborer whose wife and children were perishing for want 
of food ? Was it with the little shopkeeper who found his little capital 
disappearing under demands for the payment of usurious interest ? Was 
it not, on the contrary, with that " little oligarchy" of men who owned 
the laborers they employed, and opposed the protective policy, because 
it looked to giving the laborer increased control over the products of 
his labor ? Was it not with the rich capitalist who desired that labor 
might be cheap, and money dear ? Was it not with those foreign 
capitalists who desired that raw materials might be low in price, and 
•cloth and linen high? Was it not with those British statesmen who find 
in the enormous capitals of English ii-on masters " the most potent in- 
struments of warfare against the competing industry of other countries " ? 
To all these questions the answers must be in the affirmative, your 



44 FINANCIAL crises: 

journal having then stood conspicuous among the advocates of pro- 
slavery domination over the free laborers of the Northern States. — 

We have now another free trade period, when crisis has been followed 
by paralysis, and it may, my dear sir, be not improper to inquire on what 
side it is that you now are placed. Is it by the side of the free laborer 
who is perishing because of inability to sell his labor ? Is it by that 
of the poor farmer of the West, who finds himself compelled to pay five 
per cent, joer month, to the rich capitalist ? Is it by that of the unem- 
ployed mechanic of the Middle and Northern States ? Is it by that of 
the farmer whose land diminishes in value because of the enormous tax 
of transportation to which he is subjected ? Is it not, on the contrary, 
by the side of that " little oligarchy" which holds to the belief that the 
laborer is " the mud-sill" of society, that slavery for the white man and 
the black is the natural order of things, and that "free society has 
proved a failure " ? For an answer to these questions, allow me now to 
point you to the fact that you have here invoked the aid of a Senate, 
the control of which is entirely in the hands of that same " oligarchy," 
for resisting any and every change in our commercial policy asked for 
by the farmers and laborers of the Northern States. Now, as for thirty 
years past, your opponents are found among the men who sell their own 
labor, while your chief allies are found in the ranks of those by whom 
such men are classed as serfs. Need we wonder, then, that your journal 
should be always advocating the cause of the millionaires, and thus 
helping to augment the pauperism and crime whose rapid growth you 
so much lament? 

The facts being thus so entirely the reverse of what you have stated 
them to be, is it not, my dear sir, most remarkable — 

That, after aiding, during so long a period, in the establishment of 
pro-slavery domination over our domestic and foreign commerce, you 
should now venture to assert, that " the mill owners have dictated the 
whole system of indirect taxation, ever since the late war with G-reat 
Britain " ? 

That, the necessity for resorting to such mis-statements does not furnish 
you with proof conclusive of the exceeding weakness of the cause in 
support of which you are engaged ? 

That, regard for truth does not prompt you to a re-examination of the 
question, with a view to satisfying yourself that of all the pro-slavery 
advocates, the Journal of Gommerce not excepted, there is not even a 
single one that has proved more efficient than yourself? 

Hoping that you may follow my example by giving this letter a 
place in your columns, and ready to place within the reach of millions 
of protectionist readers, whatever answer you may see fit to make, I 
remain, Yours, very respectfully, 

Henry C. Carey. 
W. C. Bryant, Esq. 

Philadelphia, February 28, 1860. 



THEIR CAUSES AND EFFECTS. 45 



LETTER TENTH. 

Dear Sir. — Allow me to beg that you now review with me some 
of the facts that thus far have been presented for your consideration, 
having done which, I will ask you to say if in the annals of the world 
there can anywhere be found a more admirable contrivance for the anni- 
hilation of domestic commerce than that which exists among ourselves, 
consequent upon the adoption of British free trade doctrines. Closing 
our mills and furnaces, the government compels our people to seek the 
West. There arrived, they find themselves taxed for transportation to such 
extent that not only. have they no power to develop the mineral wealth 
that so much abounds, but are wholly unable even to construct roads by 
means of which to go to the distant market. Few in number and poor, 
they are driven to seek relief at the hands of their British friends, or 
masters, pledging their lands and houses as security for the payment of 
railroad bonds. In due season, the foreign creditor becomes owner of 
the road, anxious to increase his revenue, but, above all, anxious to 
promote the dispersion of our people, and to secure the maintenance of 
our existing colonial dependence. Seeking to accomplish that object, 
he taxes your farmers for the transportation of the produce of distant 
lands — compelling tliem to make good all the losses resulting from 
cheaply carrying the products of Wisconsin and Minnesota. Thus de- 
stroying the value of the land and labor of Atlantic States, he compels 
a further emigration, and thus on and on he goes — fully carrying out 
the British plan of recolonization, while always lauding the advantages 
to be derived from the British free trade system. It is a remarkably 
ingenious arrangement, and the more you study it, the more, my dear 
sir, you must be led to wonder at the folly of our people in having so 
long submitted to it. The British people are somewhat heavily taxed, 
but for every dollar they pay for the support of tlieir own system, do 
not our people pay ten for the support of foreign people and foreign 
goveniTnents ? 

That the strength of a community grows as its internal commerce 
increases, and declines as that commerce decays, is proved by the history 
of every nation of the world. Such being the case, allow me to ask you 
now to look with me into that commerce among ourselves, with a view 
to determining its extent. How much does Kentucky exchange with 
Missouri ? What is the annual value of the commerce of Ohio with 
Indiana, or of Virginia with Kentucky ? Scarcely more, as I imagine, 
than that of a single day's labor of their respective populations; and, 
perhaps, not even half so much. — Why is this the case? Is it not 
a necessary consequence of the absence of that diversity of employ- 
ments within the States, everywhere seen to be so indispensable to 
.the maintenance of commerce? Assuredly it is. Ohio and Indiana 
have little more than one pursuit — that of tearing out the soil, and ex- 
porting it in the form of food. Virginia and Kentucky sell their soil 



46 FINANCIAL crises: 

in the forms of tobacco and of corn. Carolina and Alabama have the 
same pursuits ; and so it is throughout by far the larger portion of the 
■jjnion — miUions of people being employed in one part of it, in robbing 
the earth of the constituents of cotton, while in others, other millions 
are employed in plundering the great treasury of nature, of the constitu- 
ents of wheat and rice, corn and tobacco, and thus destroying, for them- 
selves and their successors, the power to maintain commerce. 

The commerce of State with State is thus, as you see, my dear sir, 
but very trivial ; and the reason why it is so, is, that the commerce of 
man with his fellow-man, within the States, as a general rule, is so ex- 
ceedingly diminutive. Were the people of Illinois enabled to develop 
their almost boundless deposits of coal and iron ore, and thus to call to 
their aid the wonderful power of steam, the internal commerce of the 
State would grow rapidly — making a market at home for the food pro- 
duced, and enabling its producer to become a large consumer of cotton. 
Cotton mills then growing up, bales of cotton wool would travel up the 
Mississippi, to be given in exchange for the iron required for the roads 
of Arkansas and Alabama, and for the machinery demanded for the con- 
struction of cotton and sugar mills, in Texas and Louisiana. 

That, however, being precisely the sort of commerce which Britain 
so much dreads, and that, too, which our own government desires to 
destroy, the capitalist feels no confidence in any road dependent upon its 
growth, whether for the payment of interest upon its bonds, or dividends 
apon its stock. Hence the almost entire impossibility of obtaining the 
means of making any road that does not lead directly to Liverpool and 
Manchester. Look with me, I pray you, into the Report just now pub- 
lished, of the Sunbury and Erie Railroad — running, as it does, through 
a country abounding in mineral wealth and fertile lands. Its length 
is 288 miles, 248 of which are already made, and 148 completed by 
the laying of the iron — the expenditure having somewhat exceeded 
$8,500,000. There, however, the work stops, it being quite impossible 
to obtain, even as a temporary loan, either at home or abroad, the trivial 
sum that is yet required, except at the cost of sacrifices that must be 
ruinous to those who have commenced the work. Until it shall be 
obtained, the capital already expended must fail to be productive, and 
lands equal in extent to a moderate German kingdom, must fail to con- 
tribute to the maintenance of our people, and to the increase of the 
States in wealth, strength, and power. 

Thirty years since, Grermany did as we are doing, exporting raw ma- 
terials, and importing finished products. Adopting protection, she has 
placed herself in a position to compete with Britain for the purchase of 
wool and cotton, and for the export of knives and cloth. Then she was 
poor, but now she is so rich that her people take from us bonds by 
which our roads and lands are bound for the payment of rates of inte- . 
rest so enormous as to ruin the persons whose property has been pledged. 
— Thirty years since, we paid ofi" all our foreign debts. Adopting free 
trade measures, we have since created a foreign debt that requires for 
payment of its interest alone, more than the products of all our farms 
that go to Europe. Then, we were rich and strong. Now, we appear 
as beggars for loans in every money market of Europe, and are fast be- 
eoming the very paupers of the world. 



THEIR CAUSES AND EPEECTS. 47 

That our system tends to the destruction of domestic commerce in the 
Atlantic States, is beyond a question. How it aifects the value of land 
and labor throughout those Western States, in whose favor you now 
appeal to your Legislature, asking for a continuance of the system by 
means of which the New York farmer is made to pay the cost of trans- 
porting the corn and wheat of his Western competitor, we may now 
inquire. 

Ten years since. Congress created in Illinois a great company of land- 
lords — granting many millions of acres of land, coupled with the obli- 
gation to construct a road from north to south, across the State. Two 
years later, an ex-Secretary of the Treasury, author of the tariif of 1846, 
was found in London, engaged in peddling off the Company's stock and 
bonds. While there, he published a book, setting forth the fact that 
Illinois abounded in rich soils, and in coal and ores, and proving that 
the land alone would pay for making a road that was to cost, according 
to my recollection, some fifteen or twenty millions of dollars — the whole 
of which must, therefore, be clear profit to the stockholders. Eventually, 
the bait was swallowed, and the result exhibits its^f in the fact that 
Mr. Cobden has been a ruined man — having been led-by his free trade 
friends to invest therein the whole sum of $350,000 paidto him by 
the Manchester manufacturers, as compensation for his successfu,! efforts 
at bringing about a repeal of the British corn laws, and of our protective 
tarifi" of 1842. "'x„ 

Why is this ? Why is it, that the proprietors of so many millions of 
acres, and of a road crossing so many beds of coal and ores of various 
kinds, are ruined men ? Because the road runs from north to south, 
and not from east to west, and cannot, therefore, be made a part of any 
line leading through New York to Liverpool. Because, the value of 
the land depended upon the development of domestic commerce — that 
commerce which " Britain has so much cause to dread.'' Had the tariff 
of 1842 continued in existence, the coal of Illinois would long since have 
been brought into connection with the lead, iron, and copper ores of 
Missouri, and the country of the lakes, and with the cotton of the South ; 
and ^ then, all the promises of Mr. Walker, and all the hopes of Mr. 
Cobden, would have been fully realized. Had, however, that tariff been 
maintained, the people of Illinois would have made their own roads, and 
the country would have been spared the disgrace of having ex-Cabinet 
ministers engaged in the effort to persuade English bankers to lend the 
money required for their construction. They would have been spared, 
too, a succession of financial crises, bringing ruin to themselves, while 
enabling their British free trade friends to denounce them, in common 
with all their countrymen, as little better than thieves and vagabonds. 

The less our domestic commerce, the greater is our dependence upon 
Liverpool and Manchester, and the less our power to construct any road 
that does not lead in that direction — the general rule being, that north 
and south roads can never be made to pay. Look to your own State, 
crossed by two railroads, leading through your city to Liverpool, while 
your people are being heavily taxed for an enlargement of your canals, 
which has for its only object an increase of competition on the part of 
Western farmers; that increase, too, established at the very moment 
when your railroad owners are compelling your farmers to pay all the 



48 riNANCiAL crises: 

losses they incur in carrying Western produce at less than the mere 
cost of transportation. Passing south, you find a Pennsylvania road, 
running east and west, to compete with yours, Maryland and Virginia 
roads to compete with all, and South Carolina and Georgia roads in- 
tended to do the same; but of local roads you find almost none whatever. 
Why is this ? Because Liverpool is becoming more and more the centre 
of our system, with New York for its place of distribution. Because we 
are fast relapsing into a state of colonization even more complete than 
that which existed before the Revolution. 

For the moment, your city profits by this British free trade policy, 
the prices of lots rising as the taxation of farming lands augments, 
but, is it quite certain that her services will always be required, as dis- 
tributer of the produce of British looms ? May it not be, and that, 
too, at no distant period, that IManchester and Cincinnati will find it 
better to dispense with services that require the payment of such enor- 
mous sums as are now required for the maintenance of so many thousands 
of expensive families, the use of so many costly warehouses, and the 
payment of such enormous rates of interest ? The Grand Trunk Road 
has already, as we are told by the Daily Times, 

" Seized upon our Western carrying trade, and linked Chicago and Cincinnati 
to Portland and Boston by the way of Canada, and on terms -wliich almost defy 
competition from the trunk lines of Maryland, Pennsylvania, and New York. 
They are delivering flour and grain in New England, and both domestic and 
foreign merchandize in Ohio and Illinois, cheaper than they can be profitably 
transported via Philadelphia, or New York, or Albany. Not content with this, 
they have entered into competition with our coasting-trade from the Gulf to the 
East, and, using that other Anglo-American enterprise just alluded to, the Elinois 
Central, are delivering cotton from Memphis to the New England factories 
cheaper and with more expedition than it can be forwarded by the Mississippi 
Eiver to New Orleans, and thence by sea to New York and Boston. Nor have 
they been unmindful of their own direct steam communication with England from 
Quebec and Portland — the last-named point being converted into a mart of British- 
American commerce by reason of the perpetual lease or virtual ownership by the 
Grand Trunk Company of the Atlantic and St. Lawrence Railway from Portland 
to the Victoria Bridge. They are now using the Quebec line of screw steamers, 
already one of the most successful between England and this continent, for de- 
livering produce from Cincinnati and Chicago at Liverpool in twenty days ! — to 
■which end they issue their own responsible bills of lading in the West through to 
Liverpool. A sample of this operation may be seen in Wall Street almost any day 
attached to sterling bills of exchange made against breadstuffs and meat and 
provisions from the West on England. And it is by no means certain that in 
another year the cotton of Tennessee and North Mississippi will not be made to 
take the same extraordinary direction, say from the planting States to Manchester 
through Canada." 

Such being the case now, at the end of fourteen years of British free 
trade, what will it be ten or twenty years hence ? Arrangements are 
already on foot for connecting Southern cities with Liverpool by means 
of Portland, while, throughout the West, the managers of the road 
" have not," as we are farther told, 

'« Failed to effect the needful alliances in the West, to make the connexions at 
least temporarily complete. The Illinois Central, from Cairo to Chicago, is their 
natural ally by reason of its English proprietary, and they bridge the peninsula 
of Michigan by another English work, the Detroit and Milwaukee Eailway. As 
this last connection will not fully answer the designs of the company on the 



THEIR CAUSES AND EFFECTS. 49 

•winter and early spring trade of the West, -while the lakes are closed, it is not 
impossible that one of the older Michigan roads may be leased, like the Atlantic 
and St. Lawrence, or a controlling interest purchased in its shares and mortgages. 
The Michigan Southern has been named in this connection, because of its present 
financial embarrassments, which have cheapened almost to a nominal value its 
stock and bonds, and because, too, of its terminus at Toledo as well as Detroit ; 
the former point being essential to the Cincinnati connections of the Grand 
Trunk." 

The more frequent and severe our financial crises, the more perfect 
must become the control of British traders over all our roads, and the 
greater the tendency towards diminution in the necessity for profiting 
of the services of New York stores and New York merchants. So, at 
least, it seems to me. 

For seven years past we have talked of the construction of a road to 
California, but, in the present state of our afi"airs, becoming poorer and 
more embarrassed from year to year, it is quite impossible that we should 
evfer enter upon such a work. The wealth and power of Britain, on the 
contrary, become greater from day to day — all her colonies, ourselves 
included, being compelled to add to the value of her land and labor, 
while their own soils become more and more impoverished, and their 
own laborers are less and less employed. Let our existing commercial 
policy be maintained, and we shall see the Grand Trunk Road extended 
to the Pacific — Portland and Quebec becoming the agents of Liverpool 
and Manchester, and taking the place now occupied by New York. 

Looking at all these facts, is it not clear — 

That all our tendencies are now in the direction of colonial vassalage ? 

That, as your city has grown at the expense of others, because of its 
proximity to Liverpool, so other places, furnishing means of communica- 
tion that are more direct, may profit thereby at its expense ? 

That as Liverpool has taken the place of New York in regard to ships, 
it may soon do so in regard to trade ? And therefore. 

That the real and permanent interests of your city are to be promoted 
by an union of all our people for the re-establishment of that industrial 
independence which grew so rapidly under the protective tarifis of 1828 
and 1842 ?— 

Begging you to be assured of my continued determination to give to 
the answers you may make to these questions, the widest circulation 
among protectionist readers, I remain, my dear sir. 

Yours, very truly, 

Henry C. Caret. 
W. C. Bryant, Esq. 

Philadelphia, March 6, 1860. 



50 piNANCiAL crises; 



LETTER ELEVENTH. 

From the Evening Post, Tuesday, Feb, 28. 

•'An Example or the Effect of Protection. — Among the commodities •which 
have hitherto not been permitted to be brought into France from foreign countries 
is cutlery. It is now included in the list of merchandize to which the late treaty 
with Great Britain opens the ports of France. 

" Those who have made a comparison of French cutlery with the cutlery of the 
British islands must have been at first surprised at the difi"erence in the quality. 
Nothing can exceed the perfection of workmanship in the articles turned out from 
the workshops of Sheffield. The symmetry and perfect adaptation of the form, 
the excellence of the material, the freedom from flaws, and the min-or-like polish 
which distinguish them, have for years past been the admiration of the world. 
French cutlery, placed by its side, has a ruder, rougher appearance, an unfinished 
look, as if the proper tools were wanting to the artisan, or as if it was the product 
of a race among whom the useful arts had made less progress. 

" This is not owing to any parsimony of nature, either in supplying the mate- 
rial to be wrought or the faculties of the artisan who brings it to a useful shape. 
The ores of the French mines yield metal of an excellent quality, and the French 
race is one of the most ingenious and dexterous in the world. In all manufac- 
tures requiring the nicest precision and the greatest delicacy of workmanship the 
French may be said to excel the rest of mankind. Out of the most unpromising 
and apparently intractable materials their skilful hands fabricate articles of use 
or ornament of the most pleasing and becoming forms. AVhat, then, is the reason 
that their cutlery is so much inferior to that of Great Britain ? 

" In all probability the reason is that which at one time caused the silk trade 
to languish in Great Britain, which at one time made the people of the same 
country complain that their glass was both bad in quality and high in price. In 
both these instances the competition of foreign artisans was excluded ; the British 
manufacturer having the monopoly of the market, there was nothing to stimulate 
his ingenuity : he produced articles of inferior quality, his vocation did not flou- 
rish, and both he and the community were dissatisfied. So with regard to the 
cutlery of France, the difficulty has been the prohibition of the foreign article. 
Let the foreign and the French commodity be looked at side by side for a few 
years in the shop-windows of Paris, if the duty to which cutlery is still to be 
subject will permit it, and we think we may venture to pledge ourselves that the 
French workmen will show themselves in due time no way behind their English 
rivals. We may expect the same result to take place which has so much aston- 
ished and puzzled the friends of protection in Sardinia, where the removal of 
prohibitions and protective duties has caused a hundred diiferent branches of 
manufacturing industry to spring to sudden and prosperous activity." 

Dear Sir: — Anxious ttat all the protectionists of the Ui]ion 
should, as far as possible, have it within their power to study both sides 
of this question, I here, as you see, lay before my readers your latest 
argument against protection, thereby affording them that opportunity 
of judging for themselves which you so systematically deny to the readers 
of the Post. Why is it that it is so denied ? Is it that the British 
system can be maintained in no other manner than by such concealment 



THEIR CAUSES AND EEFECTS. 51 

of great facts as is here so clearly obvious ? While enlarging upon the 
deficiencies of French cutlery, as resulting from protection, was it neces- 
sary to shut out from view the important fact, that under a protective 
system more complete, and more steadily maintained, than any other in 
the world, France has made such extraordinary progress in all textile 
manufactures, that she now exports of them to the extent of almost hun- 
dreds of millions of dollars annually — supplying them at home and 
abroad so cheaply, that she finds herself now ready to substitute pro- 
tective duties for the prohibitions which have so long existed ? Would 
it not be far more fair and honest were you to give your readers all the 
facts, instead of limiting yourself to the few that can be made to seem 
to furnish evidence of the truth of that system to which you are so much 
attached, and to which we are indebted for the financial crises whose* 
ruinous effects you have so well described ? 

Why is it that the French people, while so successful with regard to 
silks and cottons, are so deficient in respect to the production and manu- 
facture of the various metals ? The cause of this is not, as you tell your 
readers, to be found in '' the parsimony of nature," and yet, it is a well- 
known fact, that while the supply of coal and iron ore is very limited, 
others of the most useful metals are not to be found in France, This, 
however, is not all, the " parsimony of nature " which, notwithstanding 
your denial of it, so certainly exists, being here accompanied by restric- 
tions on domestic commerce of the most injurious kind, an account 
of which, from a work of the highest character, will be found in the fol- 
lowing paragraph : 

" By the French law, all minerals of every kind belong to the croivn, and the only 
advantage the proprietor of the soil enjoys, is, to have the refusal of the mine at the 
rent fixed upon it by the croivn surveyors. There is great difBculty sometimes in 
even obtaining the leave of the crown to sink a shaft upon the property of the in- 
dividual who is anxious to undertake the speculation, and to pay the rent usually 

demanded, a certain portion of the gross product. The Comte Alexander de B 

has been vainly seeking this permission for a lead-mine on his estate in Brittany 
for upwards of ten years." 

Having read this, you cannot but be satisfied that it accounts most 
fully for French deficiencies in the mining and metallurgic arts. That 
such was the case, you knew at the time you wrote your article, or you 
did not know it. If you did, would it not have been far more fair and 
honest to have given all the facts ? If you did not, is it not evident 
that you have need to study further, before undertaking to lecture upon 
questions of such high importance ? 

Turning now from French cutlery to British glass, I find you telling 
your readers that the deficiency in this latter had been " in all proba- 
bility" due to the fact, that "the competition of foreign artisans" had 
been so entirely excluded. On the contrary, my dear sir, it was due to 
restrictions on internal commerce, glass having been, until within a few 
years past, subjected to an excise duty, yielding an annual revenue of 
more than $3,000,000. To secure the collection of that revenue, it had 
been found necessary to subject the manufacturer to such regulations 
in reference to his modes of operation as rendered improvement quite 
impossible. From the moment that domestic commerce became free, 



52 FINANCIAL CRISES : 

domestic competition grew, bringing witTi it the great changes that have 
since occurred. That such is the case, is known to all the world, and yet 
I find no mention of these important facts in this article intended for the 
readers of the Post. Would they not, my dear sir, be better instructed, 
were you to permit them to see and read both sides of this great question ? 

What has recently been done with British glass, is precisely what was 
sought to be done in France by Colbert and Turgot, both of whom saw 
in the removal of restrictions upon internal commerce the real road to 
an extended intercourse with other nations of the world. With us, the 
great obstacle standing in the way of domestic commerce, is found in 
those large British capitals which, as we are now officially informed, 
constitute "the great instruments of warfare against the competing 
capitals of other countries, and are the most essential instruments now 
remaining by which the manufacturing supremacy " of England " can 
be maintained ;" and in protecting our people against that most destruc- 
tive " warfare,'' we are but following in the direction indicated by the 
most eminent French economists, from Colbert to Chevalier. France 
has protected her people, and therefore is it, that agricultural products 
are high in price, while finished commodities are cheap, and that the 
country becomes more rich and independent from year to year. W^e 
refuse to grant protection, and therefore do we sink deeper in colonial 
vassalage from day to day. 

Foreign competition in the domestic market is, however, as we here 
are told, indispensable to improvement in the modes of manufacture. 
This being really so, how is it, my dear sir, that France has so very 
much improved in the various branches, in which foreign competition 
has been so entixQlj pj^oliihited? How is it, that Belgium and G-ermany 
have so far superseded England in regard to woollen cloths ? How is it, 
that American newspapers have so much improved, while being cheap- 
ened ? Have not these last an entire monopoly of the home market ? 
Would it be possible to print a Tribune, or a Post, in England, for New 
*York consumption ? Perfectly protected, as you yourself are, is it not 
time that you should open your eyes to the fact that it is to the stimula- 
tion of domestic competition for the purchase of raw materials, and for 
the sale of finished commodities, we must look for any and every increase 
in the wealth, happiness, and freedom of our people ? 

The more perfect the possession of the domestic market, the greater 
is the power to supply the foreign one — the Tribune being enabled to 
supply its distant subscribers so very cheaply, for the reason that it and 
its fellows have to fear no competition for home advertisements from 
the London Times, or Post. "This principle," as you yourself have 
most truly said, 

"Is common to every business. Every manufacturer practises it, by always 
allowing the purchaser of large quantities of his surplus manufacture an advan- 
tage over the domestic consumer, for the simple reason that the domestic con- 
sumer must support the manufacturer, and as the quantity of goods consumed at 
home is very much larger than that sent abroad, it is the habit of the manufac- 
turer to send his surplus abroad, and sell at any price, so as to relieve the market 
of a- surplus which might depress prices at home, and compel Mm to work at little 
or no profit." 



THEIR CAUSES AND EFFECTS. 53 

Admitting now that it were possible for the London Times to supply, 
on every evening, a paper precisely similar to yours — forcing abroad the 
surplus, and selling " at any price, so as to relieve the domestic market," 
would you not be among the first to demand protection against the 
system ? Would you not assure your readers of the entire impossibility 
of maintaining competition against a journal, all of whose expenses of 
composition and editorship were paid by the home market — leaving its 
proprietors , to look abroad for little more than the mere cost of paper 
and of presswork ? Would you not demonstrate to them the absolute ne- 
cessity of protecting tJie'inselves against a "warfare" that must inevitably 
result in the creation of a "little oligarchy" of monopolists who, when 
domestic competition had been finally broken down, would compel them 
to pay ten cents for a journal neither larger nor better than they now 
obtain for two ? Assuredly, you would. 

Addressing such arguments to your British free trade friends, they 
would, however, refer you to the columns of the Post, begging you to 
study the assurance that had there been given, that — 

"Whenever the course of financial fluctuation shall have broken the hold of 
monopolists and speculators upon the mines of iron and coal, "which the Almighty 
made for the common use of man, and whenever there shall be men of skill and 
enterprise to spare to go into the business of iron-making for a living, and not 
on speculation, who shall set their wits at it to find out the best ways and the 
cheapest processes, it must be that such an abundance both of ore and fuel can 
be made to yield plenty of iron, in spite of the competition of European iron- 
masters who have to bring their products three thousand miles to find a 
market." 

To all this you would, of course, reply, that " financial -fluctuations " 
created monopolies, and never " broke their hold ; " that men of " skill 
and enterprise" were not generally rich enough to compete with such 
rivals as the London Times; that domestic competition had already 
given us "cheaper ways and cheaper processes" than any other country 
of the world ; that the freight of a sheet of paper was as nothing com- 
pared with the cost of editorship and composition ; that all these latter 
costs were, in the case of the British journals, paid by the domestic 
market ; that " the domestic consumers supported the British manufac- 
turer 3" that the quantity of journals consumed at home was so very 

great that their producers could afford to sell abroad "at any price" 

thereby " relieving the market of a surplus which might depress prices 
at home, and compel them to work at little or no profit;" and that, for all 
these reasons, it was absolutely necessary to grant you such protection as 
would give you the same security in the domestic market as was then 
enjoyed by your foreign rivals ? 

Would not all this be equally true if said to-day of our producers of 
cloth and iron, coal and lead ? Does the policy you advocate tend to 
place them in a position successfully to contend with those British man- 
ufacturers who " voluntarily incur immense losses, in bad times, in order 
to destroy foreign competition, and to gain and keep possession of foreign 
markets"? Can they resist the action of the owners of those "great 
accumulations of capital" which have been made at our cost, and are 
now being used to " enable a few of the most wealthy capitalists to over- 



54 FINANCIAL crises: 

whelm all foreign competition in times of great depression " — tlierebj? 
largely adding to their already enormous fortunes, '■'■ before foreign capital 
can again accumulate to such extent as to be able to establish a compe- 
tition in prices with any chances of success " ? Can it be to the interest 
of any country to leave its miners and manufacturers exposed to a "war- 
fare" such as is here officially declared ? Do not they stand as much in 
need of protection, for the sake of the consumers, as you would do in 
the case supposed ? Does not your own experience prove that the more 
perfect the security of the manufacturer in the domestic market, the 
greater is the tendency to that increase of domestic competition which 
tends to increase the prices of raw materials, while lessening the cost 
of cloth and iron ? Do not men, everywhere, become more free, as that 
competition grows, and as employments become more diversified ? Is 
not, then, the question we are discussing, one of the freedom and hap- 
piness of your fellow-men ? If so, is it worthy of you to offer to your 
readers such arguments as are contained in the article above reprinted ? 
Holding myself, as always heretofore, ready to give to my readers 
your replies to the questions I have put, I remain, my dear sir, 

Yours, very truly, 

Henry C. Carey. 
W. C. Bryant, Esq. 

Philadelphia, March loth, 1860. 



THEIR CAUSES AND EFFECTS. 55 



LETTER TWELFTH. 

Dear Sir : — Thirty years since, South Carolina, pronipt-ed by a 
determination to resist the execution of laws that were in full accordance 
with both the letter and the spirit of the Constitution, first moved a dis- 
solution of the Union. Failing to find a second, she stood alone. Since 
then, all has greatly changed. Now, each successive day brings with it 
from the South not only threats but measures of disunion, each in its 
turn finding more persons in the centre and the North anxious for the 
maintenance of the Union, yet disposed towards acquiescence in the 
decision of their southern brethren, whatever that may prove to be. 
This is a great change to have been efi'ected in so brief a period, and sad 
as it is great. To what may it be attributed, and how may the remedy 
be applied? 

Before answering this latter question, let us inquire into the causes 
of the disease — for that purpose looking for a moment into the records 
of our past. The men who made the Kevolution did so, because they 
were tired of a system the essence of which was found in Lord Chatham's 
declaration, that the colonists should not be permitted to make for them- 
selves " even so much as a single hobnail." They were sensible of the 
exhaustive character of a policy that compelled them to make all their 
exchanges in a single market — thereby enriching their foreign masters, 
while ruining themselves. Against this system they needed protection, 
and therefore did they make the Kevolution — seeking political inde- 
pendence as a means of obtaining industrial and commercial independ- 
ence. To render that protection really efiective, they formed a more 
perfect union, whose first Congress gave us, as its first law, an act for 
the protection of manufactures. Washington and his secretaries, Ham- 
ilton and Jefierson, approved this course of action, and in so doing were 
followed by all of Washington's successors, down to General Jackson. 
For half a century, from 1783 to 1833, such was the general tendency 
of our commercial policy, and therefore was it that, notwithstanding the 
plunder of our merchants under British Orders in Council and French 
Decrees, and notwithstanding interferences with commerce by embargo 
and non-intercourse laws, there occurred in that long period, in time of 
peace, no single financial revulsion, involving suspension by our banks, 
or stoppage of payment by the government. In all that period there 
was, consequently, a general tendency toward harmony between the North 
and the South, in reference to the vexed question of slavery — both Vir- 
ginia and Maryland having, in 1832, shown themselves almost prepared 
for abolition. Had the then existing commercial policy been maintained, 
the years that since have passed would have been marked by daily 
growth of harmony, and of confidence in the utility and permanence of 
our Union. 

Such, unhappily, was not to be the case. Even at that moment South 
Carolina was preparing to assume that entire control of our commercial 



56 FINANCIAL crises: 

policy, wticli, with the exception of a single Presidential term, slie has 
since maintained — thereby forcing the Union hack to that colonial system, 
emancipation from which had been the primary object of the men who 
made the Kevoliition. With that exception her reign has now endured 
for more than five and twenty years, a period marked by constantly- 
recurring financial convulsions, attended by suspensions of our banks, 
bankruptcies of individuals and of the government, and growing discord 
among the States. 

What, you will probably ask, is the connection between financial re- 
vulsion and sectional discord ? Go with me, my dear sir, for a moment, 
into the poor dwelling of one of our unemployed workmen, and I will 
show you. The day is cold, and so is his stove. His wife and children 
are poorly clothed. His bed has been pawned for money with which to 
obtain food for his starving family. He himself has for months been 
idle, the shop in which he had been used to work having been closed, 
and its owner ruined. Ask him why is this, and he will tell you to look 
to our auction-stores and our shops, gorged with the products of foreign 
labor, while our own laborers perish in the absence of employment that 
will give them food. Ask him what is the remedy for this, and, if he 
is old enough to remember the admirable effects of the tarifi" of 1842, 
he will tell you that there can be none, so long as southern commercial 
policy shall continue to carry poverty, destitution, and death, into the 
homes of those who must sell their labor if they would live. That man 
has, perhaps, already conceived some idea of the existence of an " irre- 
pressible conflict" between free and slave labor. A year hence, he may 
be driven by poverty into abolitionism. 

The picture here presented is no fancy sketch. It is drawn from life. 
This man is the type of hundreds of thousands, I might say millions, 
of persons of various conditions of life, who have been ruined in the 
repeated financial crises of the five-and-twenty years of British free trade 
and South Carolinian domination. Follow those men on their weary 
way to the West, embittered as they are by the knowledge that it is to 
southern policy it is due that they are compelled to separate themselves 
from homes and friends, and perhaps from wives and children. See them, 
on their arrival there, paying treble and quadruple prices for the land 
they need, to the greedy speculator who finds his richest harvest in free 
trade times. Mark them, next, contracting for the payment of four and 
even five per cent per month, for the little money they need, knowing, 
as they do, that we are exporting almost millions of gold per week, to 
pay to foreigners for services that they would gladly have performed. 
Watch them as they give for little more than a single yard of cotton 
cloth, a bushel of corn, that under a different policy would give them 
almost a dozen yards. Trace them onward, until you find their little 
properties passing into the hands of the sheriff", they themselves being 
forced to seek new homes in lands that are even yet more distant. 
Reflect, I pray you, upon these facts, and you will find in them, my dear 
sir, the reasons why the soil of Kansas has been stained by the blood of 
men who, under other le_gislation, would have been found acting together 
for the promotion of the general good. 

Mr. Calhoun sowed the seeds of sectionalism, abolitionism, and dis- 
union, on the day on which he planted his free trade tree. Well watered 



THEIR CAUSES AND EEPECTS. 57 

and carefully tended by yourself and otliers, all have thriven, and all are 
now yielding fruit — in exhaustion of the soil of the older States, and 
consequent thirst for the acquisition of distant territory; in Kansas 
murders and Harper's Ferry riots; in civil and foreign wars. It is 
the same fruit that has been produced in Ireland, India, and all other 
countries that are subjected to the British system. Desiring that the 
fruit may, wither, you must lay the axe to the root of the tree. That 
done, the noxious plants that have flourished in its shade will quickly 
decay and disappear. 

We are told, however, that the interests of the South are to be pro- 
moted by the maintenance of the system under which Ireland and India 
have been ruined, and which it is the fashion of the day to term free 
trade. Was that the opinion of Washington, Jefferson, Madison, or 
Jackson ? Is it, even now, the opinion of those Southern men whose 
views in regard to the slavery question' are most in accordance with your 
own ? Are not Kentucky and Tennessee, Virginia and North Caro- 
lina, Alabama and Missouri, rich in fuel and iron ore, and all the other 
materials required for the production of a varied industry? Did not. 
the domestic consumption of cotton increase thrice more rapidly than 
the population, under the tariff of 1842 ? Had it continued to increase 
as it then was doing, would it not now absorb a million and a half of 
bales — diminishing by many hundreds of thousands the quantity for 
which we need a foreign market ? Under such circumstances would not 
our planters obtain more for two and a half million of bales than they 
now do for three and a half millions ? Rely upon it, my dear sir, there 
is no discord in the real and permanent interests of the various sections 
of the Union. There, all is perfect harmony, and what we now most 
need is the recognition, by men like you, and by our southern brethren, 
of the existence of that great and important fact. In that direction, and 
that alone, may be found the remedy for our great disease. 

Looking for it there, the effect will soon exhibit itself in this develop- 
ment of the vast natural resources of every section of the country — in 
the utilization of the great water-powers of both South and North — and 
in the increase of that internal commerce to which, alone, we can look 
for extrication from the difficulties in which we are now involved. Let 
our policy be such as to produce development of that commerce, and 
villages will become tied to villages, cities to cities, States to States, and 
zones to zones, by silken threads scarcely visible to the eye, yet strong 
enough to bid defiance to every effort that may be made to break them. 
British policy sought to prevent the creation of such threads — British 
politicians having seen that by crossing and recrossing each other, and 
tying together the Puritan of the north, the Quaker, the German, and 
the Irishman of the centre, and the Episcopalian of the south, they 
would give unity and strength to the great whole that would be thus 
produced. Such, too, is the tendency of our present policy, our whole 
energies having been, and being now, given to the creation of nearly 
parallel lines of communication — roads and canals passing from west to 
east through New York and Pennsylvania, Maryland, Virginia, and Caro- 
lina — always at war with each other, and never touching until they 
reach the commercial capital of the British islands. In that direction 
lie pauperism, sectionalism, weakness, and final ruin of our system, 



58 FINANCIAL crises: 

Desiring that tlie Union may be maintained we must seek again the road 
so plainly indicated to ns by Washington, Jefferson, Madison, Monroe, 
and Jackson, the greatest men the South has yet produced. 

In common -with Franklin and Adams, Hancock and Hamilton, those 
men clearly saw that it was to the industrial element we were to look 
for that cement by which our people and our States were to be held 
together. Forgetting all the lessons they had taught, we have now so 
long been following in the direction indicated by our British free trade 
friends — by those who now see, as was seen before the Kevolution, in 
the dispersion of our people the means of maintaining colonial vassalage 
— that already are they congratulating themselves upon the approaching 
dissolution of the Union, and the entire re-establishment of British influ- 
ence over this northern portion of the continent. For proof of this, 
permit me to refer you to the following extracts from the Morning Post, 
now the recognised organ of the Palmerstonian government : 

"If ike northern States should separate from the Southern on the question of slavery 
— one which now so fiercely agitates the pubHc mind in America — that portion 
of the Grand Trunk Railway which traverses Maine, might at any day be closed 
against England, unless, indeed, the people of that State, with an eye to commercial 
profit, should offer to annex themselves to Canada. On military, as well as commer- 
cial grounds, it is obviously necessary that British North America should possess 
on the Atlantic a port open at all times of the year — a port which, whilst the ter- 
minus of that railway communication which is destined to do so much for the 
development and consolidation of the wealth and prosperity of British North 
America, will make England equally in peace and war independent of the United 
States. We trust that the question of confederation will be speedily forced upon 
the attention of her Majesty's Ministers. The present time is the most propitious 

for its discussion If slavery is to be the Nemesis of Republican 

America — if separation is to take place — the confederated States of British North 
America, then a strong and compact nation, would virtually hold the balance of 
power on the continent, and lead to the restoration of that influence which, more than 
eighty years ago, England ivas supposed to have lost. This object, with the uncer- 
tain future of Republican institutions in the United States before us, is a subject 
worthy of the early and earnest consideration of the Parliament and people of the 
mother country." 

Shall these anticipations be realised ? That they must be so, unless 
our commercial policy shall be changed, i.? as certain as that the light 
of day will follow the darkness of the night. Look where we may, dis- 
cord, decay, and slavery, march hand in hand with the British free trade 
system — harmony and freedom, wealth and strength, on the contrary, 
growing in all those countries by which that system is resisted. Such 
having been, and being now, the case, are you not, my dear sir, in your 
steady advocacy of Carolinian policy among ourselves, doing all that lies 
in your power toward undoing the work that was done by the men of '76 ? 

Kepeating once again my offer to place your answers to this and other 
questions within the reach of a million and a half of protectionist readers, 
I remain. Yours, very respectfully, 

Henry C. Carey. 
W. C. Bryant, Esq. 

Philadelphia, March 21, 1860. 



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